Land O’Lakes delivers strong FY17 results against challenging market conditions

By Mary Ellen Shoup

- Last updated on GMT

Land O'Lakes found success aggressively leveraging its 'value-added' approach to doing business last year. Pic: Land O'Lakes
Land O'Lakes found success aggressively leveraging its 'value-added' approach to doing business last year. Pic: Land O'Lakes

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Land O’Lakes’ dairy foods business delivered growth despite some headwinds in US dairy market such as oversupply and new competition throughout the supply chain, posting sales of $3.9bn with pre-tax earnings of $70m for FY17 and delivering $149m back to its members.

“We are confident our strategy of delivering value-added, branded products and services has positioned us well to navigate dynamic food and agriculture industries and continue delivering value to our farmer owners and retail partners in 2018 and beyond,"​ Land O'Lakes president and CEO Chris Policinski said.

The dairy cooperative credited part of its growth to its acquisition of Vermont Creamery​, which expanded its portfolio to include more specialty, artisanal, and premium-style dairy products.

Land O’Lakes branded butter also saw improved margins delivering “record earnings” ​in 2017. The company added it will roll out new packaging for butter products that displays the words “farmer owned”​ on the front of pack after a successful pilot last year.

Additionally, sales of Land O’Lakes deli cheese generated the highest sales and profit in four years.

Land O’Lakes said it will continue to explore and invest in new dairy innovations through its accelerator program launched last year, selecting five dairy entrepreneurs that the company would help develop and expand their market presence.

Animal nutrition drives growth

Land O’Lakes animal nutrition delivered growth of $92m in pretax earnings in 2017, largely driven by the company’s largest merger in its history, fully integrating WinField United, bringing multiple new products to market in the division.

“The business saw strength in the business-to-business platform with Nutra Blend and milk replacer, and strengthened key customer relationships,”​ Policinski and chairman of the board Pete Kappelman said in a letter to investors.

Its young animal dairy program continued to see positive results with Land O’Lakes milk replacer, AMPLI-CALF Starter, and AMPLI-CALF Grower, which all helped to unlock incremental milk output for producers, the company said.

Internationally, Land O'Lakes continued to build its commercial portfolio in Mexico, Canada and Africa. It introduced high-value animal nutrition products gained through its WinField United acquisition to help Mexican farmers become more productive.

The company’s animal nutrition venture in Kenya, Bidco Land O’Lakes, delivered better-than-expected results after a strong first year, growing 80% in 2016. Land O’Lakes said it intends to expand this business to all of East Africa eventually.

“With nearly 450m people, East Africa has large markets that will continue to grow rapidly,”​ Jerry Kaminski, Land O’Lakes international chief operating officer, said.

"This joint venture …positions Land O’Lakes to be a leader in the growing African marketplace."

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