Company update: Land O’Lakes reports 2011 results

Chris Policinski, Land O’Lakes’ president and CEO, said: “Our 2011 results reflect strong performance in a challenging economy and volatile marketplace.”

 

“Agriculture and food production are among the best growth industries of our era,” Policinski added.

He cited the increasing demand for food, driven by an expanding global population, which is expected to increase from nearly 7 billion people today to more than 9 billion by 2050.

 

 

Sales and Earnings
Land O’Lakes 2011 net sales totaled US$12.8 billion, up 15 percent from US$11.1 billion in 2010. These results include record revenues in the company Dairy Foods, Feed and Crop Inputs businesses.

 

Net earnings for 2011 totaled US$182 million, up 2 percent from US$178 million in 2010.  Earnings for 2011 were impacted by US$14.7 million in unrealized hedging losses (as of Dec. 31, 2011), while 2010’s earnings include the impact of US$6.2 million in unrealized hedging gains. 

 

Balance Sheet
Total balance sheet debt, including capital leases, was US$915 million at year-end, versus US$618 million as of Dec. 31, 2010.

 

This increase was mainly due to higher working capital use, stemming from increased product prices and business growth. 

 

The company took advantage of historically low market interest rates to lock in attractive long-term debt during the year, including a US$150 million, 10-year term loan at the parent level and a US$60 million, five-year term loan at its Moark subsidiary.

 
The company’s Long-Term Debt-to-Capital ratio was 41.3 percent as of Dec. 31, 2011, versus 32.5 percent at the end of the prior year. 

 

During 2011, the company received financial rating upgrades from both Standard and Poor’s and Moody’s Investors Services, achieving Investment Grade status with both agencies.
 

 

Feed
The company’s feed business achieved a record US$3.9 billion in net sales, up 19 percent from 2010.

 

Feed generated US$18.7 million in pretax earnings, versus US$22.1 million in 2010.

 

Feed results for 2011 include a US$7.1 million unrealized hedging loss at year-end, while 2010 results included a US$2.6 million unrealized hedging gain.

 

Stronger livestock markets, innovation leadership and targeted marketing contributed to a 13 percent increase in livestock feed volume, with volume up in all key species.

 

Lifestyle feed volume was down 5 percent, reflecting a decline in animals being fed (particularly in the equine segment).

 

Premium Lifestyle feeds, value-added Livestock feeds and the company’s industry- leading young animal Milk Replacers were Feed’s leading performers.