Land O’Lakes Grows Profits During Pandemic
The pandemic threw Land O’Lakes a curve ball in early 2020, but the agribusiness and food cooperative quickly adapted and ended up producing net income that exceeded 2019.
The Fortune 500 company released its annual earnings report Wednesday, which showed net earnings for 2020 of $266 million—up 29 percent over $207 million in 2019.
“In an evolving and difficult landscape, Land O’Lakes was able to perform,” Beth Ford, Land O’Lakes president and CEO, said in a Wednesday statement. “We focused on growth in a challenging environment by standing up e-commerce across the business units as everyone moved online, developing revenue options for farmers, and working to offset significant market declines.”
Net sales for 2020 totaled $13.95 billion, up slightly from $13.89 billion in the previous year. The 2020 figure came in about $1 billion shy of 2018, when Land O’Lakes reached $14.94 billion in net sales.
After Covid-19 forced the closure of offices and schools, demand for Land O’Lakes products jumped because more people were cooking and baking at home.
Consumers were buying Land O’Lakes butters and spreads at high levels as well as stocking their carts with Kozy Shack puddings and other products. When restaurants and schools were shuttered, Land O’Lakes temporarily lost that type of food business, but it said in Wednesday’s statement that its retail sales “more than offset volume declines in food service and the impacts of commodity market volatility.”
All three of the cooperative’s business units were profitable in 2020. Pretax earnings were $63 million for animal nutrition; $150 million for crop inputs; and $49 million for dairy foods, according to the company’s 2020 annual report. Crop inputs was the only business unit in which earnings declined from the previous year.
The cooperative’s members are dairy farmers and others who own agriculture-related businesses. Land O’Lakes said in its annual report that $159 million will be paid to cooperative members.
“I always feel like I’m just the face for this great team that has done phenomenal work in a very challenging environment that is bumpy, and it feels like a marathon,” Ford said in a recent interview with Twin Cities Business.
In addition to managing the Land O’Lakes business, Ford also has been leading an effort to provide free, public access to Wi-Fi in rural communities. The initiative is targeted to helping rural students who lack internet service. In collaboration with partner organizations, the American Connection Project is allowing people to access Wi-Fi at more than 2,800 locations in 49 states.
During 2021, Ford said in her TCB interview, she expects retail product demand from home cooks will “stay elevated.” But she doesn’t think there will be product “hoarding,” which occurred during the early months of the pandemic.
“What we are questioning is what is the state of return around food service,” Ford said. “That includes restaurants, but it also includes schools, because we support a number of schools.”
Like other chief executives, Ford faces considerable uncertainties in 2021. “We believe we are in a good position for some continued growth in some of our businesses,” Ford said. “But a lot of the variability will be driven by the opening of the economy, the confidence of consumers, and the vaccine.”