Land O'Lakes Shatters Sales and Earnings Records

Land O'Lakes, Inc., today released its 2012 financial results, reporting record sales of $14.1 billion and record net earnings of $241 million. Additionally, three of the business segments achieved record sales, and the Crop Inputs segment had record earnings in addition to record sales.

The company also returned $113 million to members in 2012, the fourth consecutive year in which member returns exceeded $100 million.

The strong results in 2012 continue a trend of exceptional performance. The years of 2007 to 2012 represent the top six years for net sales and earnings in company history. During the same time, the company returned more than a half billion dollars to members.

"This consistent, positive performance is a direct result of the continuing implementation of strategies designed to build our value-added, branded businesses in Dairy Foods, Feed and Crop Inputs," said Chris Policinski, president and CEO of Land O'Lakes, Inc. "These are strong, growing segments of agribusiness."

A variety of factors influenced the 2012 performance. Among the factors were warmer-than-normal weather, which benefitted the Crop Inputs business, volatile dairy markets, and fluctuations in commodity pricing. Overall, Land O'Lakes' results were positively impacted by the continuing implementation of strategies focused on consolidating and strengthening the company's business platform, reducing costs and driving growth, Policinski said.

"Our growth strategy is fueled by the generation of cost savings and the enhancement of revenues in our businesses through a program we call Total Margin Management.  We use these funds to reinvest in product innovations and building our industry-leading brands," Policinski continued. "We also completed several key acquisitions in 2012. This requires a financial strategy that balances short-term earnings and returns with long-term investment to achieve even greater future rewards."

Sales and Earnings

Land O'Lakes 2012 net sales totaled $14.1 billion, up 10.2 percent from 2011's net sales of $12.8 billion. Net earnings for 2012 totaled $241 million, a 31 percent increase from 2011's $184 million.  

Balance Sheet

Total balance sheet debt, including capital leases, was $1,242 million at year-end, versus $915 million as of Dec. 31, 2011. To fund its 2012 acquisitions, the company issued $300 million of senior unsecured notes.

Business Unit Performance

Dairy Foods

Dairy Foods achieved strong results in 2012 despite significant challenges in the first half of the year caused by unexpected and exceptional growth in milk supplies and volatile markets. Net sales were $4.2 billion, down 4 percent from 2011, while pretax earnings improved to $38 million, a 34 percent increase from prior year.

Within the Dairy Foods portfolio, Retail Foods recorded exceptional performance including a number of new records. Record volumes were achieved by Superspreads, which include LAND O LAKES® tub butter products. Continuing innovation generated new product offerings during the year, including Butter With Olive Oil and Sea Salt and Unsalted Butter Half Sticks, a Land O'Lakes exclusive. Retail Cheese also had a strong year; LAND O LAKES® Deli cheese products moved into several of the nation's largest retail chains and innovation continued with the launch of a new 4 Cheese Italian Blend.

The Land O'Lakes strategy of growth also reshaped the portfolio mix of Dairy Foods in 2012. New growth initiatives included the launch of Saute ExpressTM Saute Starter, an on-trend, highly convenient product. Another significant growth development was the launch of Koru™ Creamery Style Yoghurt, a premium craft yoghurt that is targeted at the highly valued younger consumer.

Dairy Foods also grew through significant new acquisitions in 2012, including that of Kozy Shack Enterprises, Inc., adding this leading brand of refrigerated desserts to its product offerings. Dairy Foods also benefited from its 50 percent ownership in Eggland's Best, LLC, a newly formed joint venture with Eggland's Best, Inc.  Eggland's Best, LLC provides new outlets for the LAND O LAKES brand in the high growth category of specialty eggs.