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News and analysis on the global poultry
and animal feed industries.
on February 16, 2007

LOL forecasts ’07 layer earnings improvement

Stronger egg prices to offset rise in feed costs, the co-op says.

Land O’ Lakes, Inc.’s layer business posted a $5.5 million EBITDA loss in calendar year 2006, but the company is forecasting net earnings of $3 million in the black for 2007 as stronger egg prices are expected to offset higher feed costs.

Depressed egg prices continued to have a negative impact on the 2006 performance of the Arden Hills, Minn., based cooperative. Nonetheless, last year’s EBITDA (Earnings Before Interest, Depreciation, and Amortization) was nearly a $3 million improvement over 2005’s $8.2 million loss. 

Higher egg prices during the last quarter helped push EBITDA earnings sharply above previous-year levels. Fourth-quarter 2006 EBITDA earnings of nearly $10 million were more than $7 million higher than the same quarter in 2005. Sales for the quarter totaled $112 million, compared with $120 million in 2005.

Sales for the entire year were $398 million, down from $407 million in 2005. The decline is due to the sale of MoArk’s liquid egg business in June 2006. Volumes were up about 2 percent in the shell egg business, however, led by branded and specialty eggs, which were up 28 percent over 2005.

Dan Knutson, LOL’s Chief Financial Officer, said, in a news release,  that the layer business showed significant improvement at year’s end, and that for all of 2006, Midwest egg prices averaged 76 cents versus 68 cents in 2005.

“We’re focused on trying to add value to our layer business long term,” Knutson said. He added that LOL will strive to continue to reduce costs and be a strong marketer.

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