Land O' Lakes (LOL), holding company of MoArk LLC, has released sales and earnings for Quarter 1 of Fiscal 2009, ending March 31. For the period MoArk, the egg division, achieved sales of $138 million ($181 million in Q1, 2008) and generated a contribution (earnings) of $11.2 million ($32.3 million in Q1, 2008).
The 27% decline in sales was attributed by CEO Chris Policinski to a corresponding decline in average selling price from $1.62/dozen to $1.16/dozen. The company news release cites a 6% decline in sales revenue from specialty eggs partly compensated by a 2% rise in generic sales.
The ratio of earnings:sales (effectively operating margin) in the egg operation of LOL deteriorated from 17.8% in Q1 2008 to 8.1% in Q1 2009. This is consistent with the 65% erosion in margin which suggests escalation in production costs, most likely in the area of ingredient purchases.
The MoArk LLC egg division represented 4.7% of Q1 sales of $2.947 billion for LOL and 13% of the Q1 LOL earnings of $82.7 million. These values compare with 5.5% of LOL sales of $3.257 billion and 53% of earnings of $661.3 million in the corresponding quarter of 2008.
