Land O’Lakes Inc. reported 2014 net earnings of $266 million on record sales of $15 billion and a record $184 million in cash returned to members. These results were driven by continued growth in key areas of the company’s core business units: Crop Inputs, Dairy Foods and Feed.
“Our 2014 results reflect record annual revenues, continuing nearly a decade of consistent growth and increasing returns for our member-owners,” said Chris Policinski, president and CEO of Land O’Lakes.
Year-end details
Land O’Lakes’ net earnings for 2014 were $266 million, down from $306 million the previous year. These results reflect $18 million in pretax restructure and impairment charges related to a facility closure in Denmark, Wisconsin, and other organizational restructuring. Pretax earnings on continuing operations before unrealized hedging and rebate adjustments, which are used to determine member patronage, were up 11.6 percent to a record $308 million compared to the previous year.
Cash returned to members of $184 million represents a 25 percent increase compared with the previous year. This is the sixth consecutive year cash returned to members has exceeded $100 million, bringing the nine-year total to more than $1 billion.
Fourth quarter results
For the quarter ended Dec. 31, 2014, Land O’Lakes delivered net earnings of $38.3 million on quarterly revenues of $3.5 billion, a slight increase in year-over-year revenues. Fourth quarter earnings reflected the downward pressure exerted on the global dairy markets.
Business segments
Crop Inputs reported sales of $4.9 billion, up from the previous year. Pretax earnings totaled $220 million, up $2 million compared to the previous year. These results continue a multi-year trend of growth, driven by the market strength of the WinField brand and successful pursuit of new opportunities in rapidly growing agribusiness segments that focus on productivity, sustainability and new technologies in precision agriculture. Corn volumes were down 3 percent as planted acres decreased due to declines in corn prices. Soybean volumes increased 24 percent in 2014 compared to the previous year. Alfalfa volumes increased 1 percent year over year.
Feed reported sales of $4.7 billion, down slightly from $4.8 billion in 2013. Pretax earnings of $27.8 million increased 58 percent compared to the previous year. These results were driven by increased demand for products in the core livestock and lifestyle segments and the successful marketing of the Purina Animal Nutrition Center, located in Gray Summit, Missouri. Livestock feed sales increased 6 percent and Lifestyle product sales increased 2 percent year-over-year. In its first full year of operation, the new Purina Animal Nutrition Center generated $5 million of incremental gross margin, more than triple the gross margin generated in 2012, the last full year prior to the remodeling investment.
During 2014, Land O'Lakes continued to implement previously announced plans to divest of its commodity egg business, operated through Moark L.L.C. During the year, the company sold substantially all of the Western and Midwestern assets of this business for $166 million, a profit of $6 million. Land O’Lakes continues to evaluate options with respect to the remaining commodity egg assets in the Eastern United States.
Total Land O'Lakes debt as of Dec. 31, 2014 was $1.14 billion, down $57 million from 2013. The decrease was primarily due to Moark asset sales and debt repayment. The company also ended the year with $592 million in cash and marketable securities.
