Earnings flat as Land O'Lakes' sales spike

by Keith Nunes
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ARDEN HILLS, MINN. — Due primarily to the acquisition of Agriliance L.L.C. in late 2007 that bolstered its presence in the crop protection business, Land O’Lakes, Inc., experienced a 35% increase in annual sales during fiscal year 2008 compared to fiscal 2007, but net earnings remained flat. For 2008, the cooperative recorded net earnings of $159,620,000 on sales of $12,039,259,000, which compared with earnings of $160,929,000 on sales of $8,924,895,000 during fiscal 2007.

"Despite a soft fourth quarter, we delivered strong overall results in 2008 with record sales, net earning nearly matching 2007’s record level and our highest-ever cash returned to members," said Chris Policinski, president and chief executive officer.

Within the company’s Dairy Foods division, pre-tax earnings declined 81%, dropping to $16.3 million this past year from $87.4 million in fiscal 2007. Sales for the segment were $4.1 billion in 2008 compared with $4.7 billion in 2007. The company blamed the declining results on difficult economic conditions that impacted consumer purchasing decisions.

Within MoArk, L.L.C., the cooperative’s egg business, earning rose 50% during the year, climbing to $29.9 million in 2008 from $19.9 million in 2007. Sales were $606 million in 2008 compared with $514 million the previous year.

For the fourth quarter of fiscal 2008, Land O’Lakes recorded a loss of $33,010,000, which compared with net earnings of $25,712,000 the year before. Sales for the quarter were $2,670,465,000 compared with $2,586,023,000 during 2007.

"There is no doubt that there are challenges ahead," Mr. Policinski said. "No matter what business you are in, you can expect a bumpy ride in 2009. At Land O’Lakes, we’re confident we have the financial foundation, resources, strategies and people in place to weather the storm and continue to generate value for member-owners and customers."

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