Lower egg prices hurt Land O'Lakes Q1 income

by Eric Schroeder
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ARDEN HILLS, MINN. — Strength in the company’s Dairy Foods, Feed, Seed and Agronomy businesses were not enough to offset depressed egg prices at Land O’Lakes, Inc., as net income in the first quarter ended March 31 fell 47% to $24,296,000 from $45,125,000.

Net sales in the quarter were $2,046,425,000, up 2% from $2,005,618,000 in the first quarter of fiscal 2004.

In a breakdown of financials within its business units, Land O’Lakes said Dairy Foods recorded a pre-tax loss of $700,000 in the quarter, down from earnings of $10,800,000 in the same year-ago period. Sales for the quarter totaled $955 million, up about $48 million a year ago.

"The first quarter saw the introduction of Land O’Lakes Light Butter with Canola Oil, which exceeded expectations in terms of both customer acceptance and volumes," the cooperative said. "The company also introduced several new reduced-fat cheeses during the quarter, and other recently launched products (like Land O’Lakes Spreadable Butter with Canola Oil and Land O’Lakes Fresh Buttery Taste Spread) performed well."

The primary factor driving earnings lower during the quarter was depressed egg prices, the company said. Eggs averaged 74c per dozen in the 2005 first quarter versus $1.21 per dozen in the first quarter of 2004.

The lower egg prices contributed to a pre-tax loss of $6,300,000 in the company’s Layers/Eggs business, which compared with earnings of $29,400,000 in the same year-ago period. Sales for the quarter were $105 million, down from $175 million.

The farmer-owned food and agriculture cooperative said it made progress during the quarter in paying down debt, portfolio management and strengthening its brands and branded businesses. In portfolio management, Land O’Lakes completed the sale of substantially all of its swine production assets to Maschhoffs West L.L.C.

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