Land O’Lakes Inc. reported net earnings for the second quarter of $81.3 million on sales of $2.8 billion, down from the year-ago $112.5 million and $3.3 billion, respectively. LOL was proud of six-month results of $161 million on sales of $5.8 billion in light of the overall global economy, saying they compared favorably with the year-ago $175.6 million and $6.6 billion, respectively.
LOL’s Agronomy unit reported second-quarter pre-tax income of $77 million on sales of $790.5 million, up from the year-ago $46.8 million and $993.7 million, respectively. Six-month income was $69.3 million on sales of $1.2 billion, versus the year-ago $37.6 million and $1.48 billion, respectively.
Agronomy includes LOL’s crop protection business as well as seeds aligned under the Winfield Solutions banner, along with its 50 percent stake in Agriliance LLC. LOL said crop protection results were down, mainly due to declines in the value of some key products such as glyphosate, inventory carry-over, just-in-time purchasing by customers, and a later growing season.
As for Agriliance, LOL said its investment in the company was $169 million as of June 30, 2009. From Agriliance, LOL recorded $7.2 million of losses for the six months ending June 30, 2009, versus year-ago equity earnings of $3.4 million. LOL said the 2009 results were unfavorably impacted by lower margins on crop nutrients.
As reported earlier, LOL and CHS Inc., the other Agriliance owner, have continued to shed Agriliance assets. In the latest round (GM Aug. 10, p. 13; Aug. 17, p. 9), LOL says it expects to take 34 retail sites over the next several months, while CHS will take nine and Tennessee Farmers Cooperative will take 11.
In the meantime, LOL has given an update on the earlier deal (GM April 13, p. 14) in which nine Agriliance units in Georgia and Mississippi were sold to Agri-AFC LLC, a joint venture between Alabama Farmers Cooperative Inc. and LOL’s own Winfield Solutions LLC. LOL said AFC entered into an operating lease and an asset purchase agreement and immediately began operating the retail locations, purchasing the working capital and primarily inventory associated with the locations for $18.3 million. AFC completed the transaction in July and acquired the property, plant, and equipment located at the sites for $2.9 million in cash.