Land O'Lakes reports record earnings despite slow farm economy

For Land O'Lakes Inc., 2016 was a lot like 2015: another year of record earnings and another year of dealing with the slow farm economy.

The Arden Hills-based cooperative reported Tuesday $320 million in earnings for 2016, up from $304 million the year before.

Land O'Lakes President and CEO Chris Policinski attributed the performance to the company's "marketplace back" approach to doing business.

That orientation doesn't just produce commodities, he said, but constantly innovates by paying close attention to what consumers, customers and farmers say they want and need to be successful.

"We're pleased with 2016," Policinski said in an interview. "The environment didn't necessarily give us that much wind in our sails, and in fact we had to fight through some things, but it's one year in a series of good years and it shows that our strategy is working."

One of the nation's largest cooperatives, Land O'Lakes is known by consumers for its signature butter, branded cheese, desserts and other dairy products, and by farmers for its Purina livestock feed and its crop consulting and supply businesses.

Overall, Land O'Lakes revenue increased slightly to $13.2 billion in 2016 compared to $13 billion the previous year.

However, its dairy foods division reported net sales of $3.8 billion compared with $4 billion in 2015.

Policinski said that the company in 2016 achieved its highest-ever volumes for branded butter and food service business that were able to build strong earnings despite the impact of low commodity prices and record milk production in the East.

The company's Purina animal feed segment reported 2016 net sales of $3.8 billion, down from $4.2 billion the year before.

Policinski said the business will continue to reinvent itself and accelerate the production of a richer mix of products.

Some of the biggest changes came from its crop inputs segment, with sales of $5.5 billion, up from $4.8 billion in 2015. That division, a crop advising and supply business formerly known as WinField Solutions, acquired United Suppliers Inc., an Iowa-based crop protection and seed business in a two-step merger that began in 2015.

Policinski said the first full year of the integrated business now called WinField United has shown growth and scale. He expects continued growth when the full unification of the two is complete in October 2017 and United's crop nutrient products are added to the company's portfolio.

In 2016, Land O'Lakes created a new joint venture to help farmers in East Africa improve animal nutrition, and entered into an agreement showing intent to form a seed distribution joint venture in China.

It also created SUSTAIN, a unit to focus on sustainability and conservation programs across the country, and announced a specific public-private partnership with the state of Minnesota to protect waterways by working more closely with growers and producers on soil and water conservation strategies.

The company also began construction to expand its corporate headquarters to bring together employees now scattered in Arden Hills, Shoreview and Roseville.

That project, to be completed in 2018, will allow all 2,000 corporate workers to be on the same campus. Land O'Lakes employs about 10,000 workers and does business in more than 60 countries, and its products or services are used by about 1 in 4 farmers in the U.S.

Tom Meersman • 612-673-7388