Land O'Lakes and Michael Foods reported divergent results for their egg operations covering their third quarters of the current fiscal year.
For the third quarter of 2009, ending September 30, Land O'Lakes reported a $14.3 million pre-tax loss for their Moark LLC subsidiary on sales of $111 million. These values can be compared to a $10.3 million pre-tax loss on $135 million sales for the third quarter of FY 2008.
In commenting on results, president and CEO Chris Policinski noted, "We have performed well in a very challenging economic environment." He added, "Going forward, the company will continue to focus on cost reduction, operating efficiency and effectively serving the commodity egg market when also building its brand in the specialty egg volume and market share."
Michael Foods in contrast reported a profit for their third quarter ended October 3, 2009. The company generated net earnings of $20.1 million on sales of $261.3 million. Corresponding values for the third quarter of 2008 were $12.7 million and $318.9 million. Earnings before interest, taxation, depreciation and amortization, used to measure and compare results, amount to $44.6 million and $44.1 million respectively for the third quarters of FY 2009 and 2008 respectively. The Executive Chairman, Greg A. Ostrander commented, "Our third quarter results were driven by the continued improved results for Crystal Farms and foodservice egg products." He continued, "within the foodservice sector, our egg product margins improved, reflecting our continued focus on moving our customers to more convenient, higher margin value added products."
In common with Cal-Maine Foods which reported first quarter results for fiscal 2010 in late September, losses of 3.8 million on net sales of $207 million were attributable to low margins and weak institutional sales. It is however noted that Cal-Maine reported earnings of $16 million on sales of $229.2 million for their second quarter of FY 2010 ending November 28, 2009.
Producers committed to generic eggs suffer disproportionately compared to companies with a higher portion of added value and specialty eggs. Cal-Maine for example reported that for their Q2 of 2010, specialty sales represented 13.7% of volume but 20.5% of sales value. Michael Foods is committed to producing and distributing processed egg products to foodservice, retail and food manufacturers, effectively representing 69% of total company sales.
The gross margin generated by the Michael Foods overall product line was 19.8% for the quarter compared to 9.7% for the first quarter of 2010 for Cal-Maine Foods which is a pure egg business. Land O’Lakes did not break out segments for their third quarter but reference to their annual report for the year ending December 31, 2008 showed a gross margin of 11.7% for Moark LLC.
