Sales Up, Earnings Down For Land O’Lakes In 2014
Land O’Lakes Inc. hit record sales in 2014 and returned more cash to members, but reported a sharp decline in net earnings.
The Arden Hills-based agricultural cooperative said earnings were $266 million, down 13 percent from $306 million in 2013.
About half of the decline was attributed to pre-tax and other restructuring, as well as the closure of a Wisconsin facility. The company also took a hit from falling dairy prices during the fourth quarter, driven in part by a strong dollar and a milk-thirsty China that built up generous stockpiles of powdered milk and is now running it down, all while more competition floods the market.
Despite the earnings decline, most of the news was good for Land O’Lakes. Sales hit a record-high of $15 billion, up from $14.2 billion in 2013. And the company paid out $184 million to its members, a 25 percent increase over 2013, which was also a record-setting year with a 30 percent year-over-year increase in payouts. Since 2005, the company has paid out more than $1 billion.
“Our 2014 results reflect record annual revenues, continuing nearly a decade of consistent growth and increasing returns for our member-owners,” CEO Chris Policinski said in a statement.
The company continued its divestment of its commodity egg business, with all markets except the eastern United States spun off.
Land O’Lakes remains the second-largest agricultural cooperative in the nation, according to the Department of Agriculture. Only fellow Twin Cities cooperative CHS Inc., located in Inver Grove Heights, is larger.
Last Thursday, the company announced its acquisition of Columbus, Ohio-based marketing firm Farmer, Lumpe + McClelland (FLM+). The firm focuses on agribusiness and rural marketing. The deal is expected to close in the second quarter of the year, with employees being retained.
The acquisition is meant to help members better meet growth goals and respond to emerging markets. “This partnership with FLM+ will provide valuable resources without our federated co-op system to drive the growth of our member-owners,” Policinski said.