Net earnings for the Minnesota-based business rose from $266m in 2014 to $308m last year despite the “significant headwinds… including increased regulation, wild commodity markets and consolidation”, said Land O’Lakes in its annual report.
Low commodity prices had impacted results across the crop inputs portfolio, said Land O’Lakes. Net sales fell slightly from $4.9bn in 2014 to $4.8bn last year, while pretax earnings fell from $220m to $190m.
The decline in commodity prices was offset, to some extent, by strength in Croplan corn, soybeans and alfalfa, said the supplier, which introduced nine new products in 2015.
“Additionally, we completed the largest merger in our company history and extended our global reach to Africa,” said president and CEO Chris Policinski, referring to the merger of crop protection and seed business United Suppliers with Land O’Lake’s Winfield Solutions. Land O’Lakes also purchased a majority ownership stake in Villa Crop Protection, a South African crop protection products company that was the business’s first commercial investment in Africa.
Sales in the business’s Dairy Foods division fell from $5.1bn in 2014 to $4bn this year.
In its annual report, the business described the dairy markets in 2015 as a “rollercoaster ride of epic volatility” with record global supply levels defying historic trends.
But it claimed it had “successfully managed the downside in milk powder and overall commodity markets” through risk management, price strategies, inventory management and strong relationships with customers.
Land O’Lakes said it had seen growth in butter, branded cheese, foodservice and refrigerated desserts, with Kozy Shack continuing to grow volumes in a “challenging category”.
Pre-tax earnings from Dairy Foods more than doubled from $40m in 2014 to $83m, however, which was the result of a one-time gain from the sale of Land O’Lakes’ 35% interest in Advanced Food Products.
The Feed division reported 2015 net sales of $4.2bn, down from $4.7bn 2014, although pretax earnings rose from $28m to $58m.
Land O’Lakes said its core Purina-branded feed lines had delivered “record-setting” performance thanks to operational strategies that had driven market share and accelerated growth
Referring to the overall business, which recorded sales of $13bn versus about $15bn in 2014, Policinski said: “Delivering record earnings in the current market environment underscores the strength of Land O’Lakes’ core business strategy.”
“This was a record earnings year for Land O’Lakes in spite of challenging commodity markets, declining on-farm income and increasing industry consolidation.”