Land O'Lakes sees earnings gain in fiscal '05

by Keith Nunes
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ARDEN HILLS, MINN. — Land O'Lakes, Inc. posted earnings of $128,943,000 in fiscal 2005, up sharply from $21,433,000 for the same period a year ago. Company officials indicated that 2005 earnings benefited from a $69.7 million after-tax gain on the third-quarter sale of the company’s 38% interest in CF Industries. Full-year 2005 results included unrealized hedging gains of $5.3 million, versus unrealized hedging losses of $23.1 million in 2004.

Sales in 2005 totaled $7,556,677,000, down 1% from 2004 sales of 7,656,826,000.

Overall, the company experience strong and improved performance in its Feed, Seed and Agronomy businesses, and solid performance in its Dairy Foods value-added product categories. The positive performances were partially offset by losses in the company’s Layers business and Dairy Foods manufacturing operations.

For the fourth quarter, Land O'Lakes sustained a loss of $1,638,000, which compared with a loss of $10,553,000 for the fourth quarter of 2004. Fourth-quarter sales of $2,001,275,000 represented a 6% increase over the fourth quarter of 2004.

The company also reported significant progress against its key strategic initiatives of paying down debt and building balance sheet strength, portfolio management and building its branded businesses.

Land O'Lakes reduced its total debt by approximately $350 million in 2005. The company ended the year with a significantly improved long-term debt-to-capital ratio (from 51.9% at the end of 2004 to 41.3% at the end of 2005) and strong liquidity ($521 million in cash-on-hand and unused borrowing authority). In the second half of the year, Moody’s and Standard and Poor’s each upgraded the company’s financial ratings, with both agencies indicating their ratings carried a positive outlook.

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