Land O'Lakes income soars 201% in Q2

by Eric Schroeder
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ARDEN HILLS, MINN. — Strong markets and one-time gains helped boost quarterly income at Land O’Lakes, Inc. Net income in the second quarter ended June 30 rose 201% to $104,437,000, up from income of $34,752,000 in the second quarter of last year. Net sales rose 20% in the quarter to $2,022,016,000, which compared with sales of $1,687,305,000 in the year-ago period.

For the first six months of fiscal 2007, net income was $159,374,000, up 162% from the same period a year ago, while sales were $4,204,299,000, up 14%.

"Our first-half results are not only driven in part by strong markets and, to a lesser degree, some one-time gains, but also reflect an ongoing commitment to effective cost control, the strength of our brands, and an intense focus on simplifying our business portfolio," said Chris Policinski, chief executive officer.

Overall, the dairy foods segment registered pre-tax earnings of $59.1 million, which compared with $200,000 in the second quarter of 2006. Sales in the segment rose to $993 million from $776 million. The results included a $28.5 million gain in connection with the April sale of Cheese and Protein International, a West coast cheese and whey manufacturing facility. Year to date, pre-tax earnings in dairy foods totaled $79.5 million, up sharply from a loss of $2.7 million a year ago.

Land O’Lakes said the improvement reflected strong markets, product mix, brand strength, effective cost control, and ongoing efforts to build a right-sized, strategically located and profitable manufacturing infrastructure.

The feed division posted pre-tax earnings of $1.2 million, up from a loss of $1.1 million in the second quarter of 2006. Feed sales were $704 million, up approximately 9% from the same period a year ago.

The layers/eggs division, which the company participates in via MoArk L.L.C., a wholly owned subsidiary, reported pre-tax earnings of $2.7 million. This compared with a pre-tax loss of $5.7 million in the same period a year ago. Sales for the quarter were $111 million, up from $105 million in the second quarter of 2006.

The company’s agronomy business, conducted through the joint venture Agriliance, recorded pre-tax earnings of $53.1 million, compared with $38.4 million in the same period last year.

The seed division posted pre-tax earnings of $10.3 million, up from $6.9 million. Sales for the segment were $223 million, which compared with $163 million a year ago.

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