Lamb Weston forecast its annual sales and profit below analysts’ expectations, as higher prices of its frozen food products begin to hurt volumes.
The company has been increasing prices of its products, including ready-to-cook classic and sweet potato fries to offset rising costs of manufacturing, transportation and inputs such as potatoes.
Lamb Weston, which supplies to fast-food chains such as McDonald’s and KFC-owner Yum Brands, also faced pressure from more people opting to cook their meals at home amid persistent inflation.
“Market share losses and a slowdown in restaurant traffic in the US and many of our key international markets were greater than we expected. We also incurred losses related to a voluntary product withdrawal,” CEO Tom Werner said.
Outlook
The company forecast 2025 net sales in the range of $6.6 billion (€6.09 billion) to $6.8 billion (€6.3 billion), the mid-point of which was below LSEG estimates of $6.79 billion (€6.3 billion).
It also expects full-year earnings per share to be between $4.35 and $4.85, compared with analysts’ average estimate of $6.09.
The company said its volumes in the first half of the fiscal 2025 was likely to decline low-to-mid single-digits range.
Werner added, “We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic.”
Quarterly Performance
Lamb Weston’s volumes fell 8% in the fourth quarter.
Revenue of $1.61 billion (€1.5 billion) in the quarter ended 26 May was below analysts’ estimate of $1.70 billion (€1.6 billion).
The company’s adjusted earnings per share was at 78 cents compared with the $1.26 estimated.
News by Reuters, additional reporting by ESM.
