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February 9, 2005

Land O'Lakes sales up, earnings down in 2004 ... Saputo Inc. earnings jump ... Smith Dairy Products buys Superior's packaged ice cream business ... Kraft hires new VP of nutrition ... Global Marketwatch ... Sears store concept includes groceries ... Price Chopper to build frozen foods warehouse ... Odds-and-Ends ... Stock Market Ticker ... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Land O'Lakes Inc. reports that its 2004 sales totaled $7.7 billion, a 22% increase over 2003 sales of $6.3 billion. However, the Arden Hills, Minn.-based company posted a 75% drop in 2004 net earnings of $20.1 million, compared to $82 million in 2003. Company officials attributed the loss to non-cash pretax charges of $23 million related to hedging losses and a $36.5 million impairment against its investment in a fertilizer manufacturer. The company reports strong operating performance in nearly all of its businesses for 2004. Excluding non-cash adjustments puts pretax 2004 earnings at $84.8 million, compared to $66.7 million in 2003. The company's Dairy Foods division reported sales of $4 billion for the year, a jump of 25% over 2003 sales of $3 billion. The dairy unit reported $16.5 million in pre-tax earnings for the year, compared to $3.6 million in 2003. Dairy division performance was boosted by strong showings in branded butter, spreads and deli cheese segments, as well as by its ongoing cost-reduction and product mix programs. (Company report, Minneapolis Business Journal)

Montreal-based Saputo Inc. earnings were up 16.6% to US$46.7 million in its third quarter (ending Dec. 31) of its fiscal year 2005. Revenues increased 5.6% to US$755.4 million, compared to US$715.1 million posted in third quarter the previous fiscal year. Increased sales volumes in Saputo's Canadian and Other Dairy Products units drove the results. Meanwhile, market conditions and the appreciation of the Canadian dollar resulted in sales decreases at Saputo's U.S. Dairy Products division for the quarter. Revenues for this division totaled US$237.5 million for the quarter, a 2.5% decrease from the US$243.7 million posted in the same quarter one year ago. Exchange rates eroded US$17.6 million in revenues for the quarter compared to the same period last year, while volatile U.S. cheese pricing conditions resulted in a 1.9% drop in sales volume in third quarter 2005 compared with the same period the previous year. (Company report)

Orville, Ohio-based Smith Dairy Products Co. has acquired the traditional ice cream business -- ice cream in half-gallon, five-quart and three-gallon packages -- of Superior Dairy. Smith will supply Superior Dairy customers with the packaged ice cream products under the Smith's brand. Canton, Ohio-based Superior Dairy will focus on the rapid growth of its specialty frozen dessert products, such as prepared desserts and ice cream cakes. (Company report)

Richard Black will join Northfield, Ill.-based Kraft Foods on Feb. 28 as vice president, nutrition. He will be responsible for developing and leading company-wide nutrition programs, as well as for the company's nutrition strategies and guidelines, measurement of nutritional quality and portfolio improvement opportunities. Black is currently executive director of the International Life Sciences Institute, North America, in Washington, D.C. He previously served as head of research for R&D nutrition at Novartis Consumer Health S.A., and as director of scientific/regulatory affairs and manufacturing services at Nestle. He also spent a number of years with the Kellogg Company in nutrition and scientific affairs. (Company report)

GLOBAL MARKETWATCH

As part of its regional expansion plan, Philippines-based food and beverage giant San Miguel Corp. will buy controlling interest in Singapore ice cream maker King's Creameries, which also has operations in Malaysia and exports to neighboring countries. San Miguel will purchase a 76.38% stake in the company by buying shares that are currently co-owned by Star Fortune Inc. and H&Q Asia Ventures II Ltd. Malaysian Dairy Industries Private Ltd., a dairy manufacturer also based in Singapore, owns the remaining shares. (BusinessWorld)

Parmalat news briefs: As it restructured its far-flung business holdings in 2004, Italy-based Parmalat Finanziaria SpA also showed an improvement in earnings for the year. The company reports that its marketing cutbacks helped boost earnings by 30% to $356 million at its core businesses (those still consolidated in its accounts and not earmarked for sale). The business is expected to be re-launched on the stock market this year and continues research into new dairy products. Group debt fell 232.6 million euros to 11.96 billion, partially attributable to sales of assets in 2004 and early 2005 in Argentina, Chile and Thailand. (Financial Times; Agence France Presse) ... Parmalat has sold its wholly owned chocolate-making subsidiary Streglio to alcohol producer Borsci Industria Liquori SpA, based in Turin, Italy. (ANSA English Corporate Service) ... Parmalat was fined nearly $14.3 million by Italy's antitrust authority related to the acquisition of Eurolat in 1999. When the acquisition occurred, Parmalat was required to divest some dairy brands and related production plants due to antitrust concerns. An investigation revealed that the divestments did not take place. (AFX European Focus)

Cuba bought 8,000 tons of powdered milk from California's Dairy America in a $22 million deal last week. Under the terms of the long-standing U.S. embargo of Cuba, sales of food to Cuba by U.S. interests are allowable for humanitarian purposes. Total U.S. food and agriculture sales to Cuba in 2004 are estimated at more than $1 billion. (Agence France Press)

CUSTOMER CLIPS

A smaller version of the Sears Grand concept is in the works from Hoffman Estates, Ill.-based Sears Roebuck and Co. Sears Essentials stores will be developed at 50 stores acquired from Kmart Holding Corp. and six from Wal-Mart Stores Inc. The stores are in several states including Michigan, California, Florida and Illinois. The previously announced Sears-Kmart merger is expected to close in early March, with the first 25 Sears Essentials to open this spring. The new stores will average 84,000 square feet; like the Sears Grand stores, Sears Essentials will sell grocery and convenience items, in addition to the traditional Sears department store mix. (Detroit Free Press)

Golub Corp., parent company of Schenectady, N.Y.-based Price Chopper Supermarkets, plans to build a $15 million frozen foods distribution center in Schenectady County. The 152,000-square-foot facility will replace two smaller freezer warehouses in Colonie and Waterford, N.Y., in order to service frozen food distribution for Price Chopper stores. (progressivegrocer.com)

IDFA NEWS

Register Now for IDFA's Popular "Dairy 101" Workshop
To help dairy professionals navigate the complex U.S. milk pricing structure, IDFA will hold this year's Dairy 101: Milk Procurement Workshop on April 5-6, 2005, at the Embassy Suites O'Hare in Rosemont, Ill. Since pricing knowledge is vital to all dairy professionals, industry newcomers and veterans alike are welcome to attend this popular annual program. "Dairy 101 offers a guide through the complicated integration of the Dairy Price Support Program, class pricing and the Federal Milk Marketing Orders," said Courtney Waters, IDFA senior manager of educational services. "If you need to learn or take a refresher course on dairy pricing essentials, be sure to join us in April." For complete details or to register, click here.

ODDS-AND-ENDS

Paris-based Danone SA will hold off on becoming the sole operator of its U.S. home and office delivery (HOD) bottled water venture by the end of the first half of the year, but the company does not plan to withdraw from the business. DS Waters LLP is the joint HOD venture that Danone formed with Suntory Limited in late 2003. Danone does not plan to become the full owner until the water market stabilizes. (AFX European Focus) ... The former Meadow Gold ice cream plant in Des Moines, Iowa, will make way for progress. A developer purchased the block-long, 90-year-old property for $537,500; the facility will be demolished and replaced with a 90-unit apartment building. (Des Moines Register) ... Sam Lampone, a six-year-old boy from Franklin, Wis., tapped into the power of cheese to become one of 10 winners of the Scholastic Book Club's National Show and Tell Contest. Contest guidelines suggested that a student's entry could represent the area where the student lives, so Sam created a map of Wisconsin from four types of cheese: colby jack, pepper, sharp cheddar and mozzarella. 1,200 kindergartners and first-graders from around the country entered the competition. Sam's prizes include an all-expenses-paid trip to New York, as well as 100 books for his classroom. (Milwaukee Journal Sentinel)

STOCK MARKET TICKER

As of 2/8/05, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Ingles Markets/IMKTA Kraft Foods/KFT Kroger/KR Ruddick Corp./RDK Safeway/SWY Saputo/SAP.TO Supervalu/SVU Unilever PLC/UL Weis Markets/WMK Wimm Bill Dann/WBD Winn-Dixie/WIN		34.86 80.47 52.95 18.17 60.84 13.05 33.72 17.44 23.50 18.97 36.50 32.82 38.91 38.05 15.86 03.59		-0.44 -0.02 +0.15 -0.13 +0.33 +0.00 +0.27 +0.33 +0.83 +0.23 +0.07 -0.17 -0.26 -0.90 -0.07 -0.11		-0.09 +0.02 -0.41 -0.64 +1.60 +0.00 +0.02 +0.28 +2.30 +0.19 +0.05 +1.03 +0.41 -0.02 -0.38 -0.01
Source: Yahoo! Finance

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ABOUT D-BRIEF

D-brief is written by Dairy Field magazine, a Stagnito Communications Inc. publication, www.dairyfield.com. It is provided for the benefit of the industry by the International Dairy Foods Association (IDFA), www.idfa.org.

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