The company’s operating earnings strengthened in the second quarter, excluding unrealized hedging impacts, although year-to-date earnings were behind 2009 due to challenging economic conditions.
President and CEO Chris Policinski said first-half results were driven by strong performance in key branded products lines, particularly innovative new products that appeal to consumers and business customers; and operating efficiency and balance sheet strength, which support Land O’Lakes’ ability to grow.
"I’m very pleased that our branded and proprietary product lines – particularly our new, innovative products – are performing well. This demonstrates that Land O’Lakes is meeting consumers’ changing preferences, as well as our business customers’ needs," Policinski noted.
"These strong results helped to offset challenges in our Feed and Industrial (dairy processing) Foods businesses, as well as the overall impact of a difficult economic environment."
Net sales up
reported second quarter sales of $2.96 billion, up from $2.81 billion for the same period last year.
Net sales for the first half were $6.02 billion, up from $5.76 billion for the first six months of 2009.
Year-to-date, sales were up in the company’s Dairy Foods, Seed and Crop Protection Products businesses, flat in the Egg business and lower in the Feed business, which continues to be affected by reduced numbers of commercial animals across the country.
Economic challenges impact
Second-quarter net earnings were $65.3 million, versus $81.5 million for the second-quarter of 2009.
However, 2009 earnings were enhanced by unrealized pretax hedging gains of $44.8 million, versus a gain of only $1.6 million in 2010.
Excluding unrealized hedging impacts, second-quarter net earnings were $64.3 million in 2010, up from $53.8 million in 2009.
The company reported first-half net earnings of $96.3 million, down from $164.2 million for the first half of 2009.
These results reflect unrealized hedging impacts, as well as a first-quarter 2010 charge of $25 million related to a legal settlement.
Excluding these impacts, first half net earnings were $110.7 million in 2010, down from $138.1 million in 2009.
Year-to-date earnings were improved on an operating basis versus the prior year in the Dairy and Eggs segments, while running lower than 2009 in the Feed and Crop Inputs businesses.
Land O’Lakes total debt at the end of the first half was $893 million, down approximately $75 million from June 30, 2009.
Total margin management
Looking to the second half of 2010 and beyond, the Land O’Lakes CEO affirmed the company’s commitment to Total Margin Management, a companywide initiative that focuses on revenue enhancement, cost control and risk management.
"Total Margin Management is intended to fuel profitable growth," Policinski said. "The key is to aggressively manage resources and business activity in a way that drives performance.
“ By consistently improving the way we operate and the results we deliver, we can generate more funds to invest in high-potential growth projects. And these growth projects will position Land O’Lakes to be highly competitive and create greater value for our member-owners, customers and consumers."