Lamb Weston Net Sales Record Double-Digit Increase
Lamb Weston Holdings, Inc. announced its third quarter 2018 results and updated its outlook for fiscal 2018, revealing that its net sales increased 12% to USD863mn during the third quarter 2018.
Net sales are expected to increase at the upper end of mid-single digits range in fiscal 2018, up from a previous estimate of mid-single digits.
“Our strong top- and bottom-line performance in the third quarter reflects the benefits of our capital expansion investments, our focus on delivering industry-leading customer service and our commitment to operational excellence,” said Tom Werner, president and CEO.
“Across each of our core businesses, we grew volume and improved price/mix to drive profit growth and expand margins. Our new production line in Richland, Washington is up and running, providing us with greater flexibility across our manufacturing network to support further growth, innovation and limited time offerings for our customers, as well as allowing us to better manage costs, capacity utilization and service levels. In Europe, our joint venture delivered another solid quarter by growing volume and reducing costs.”
Price/mix increased 7% due to pricing actions and favorable product and customer mix. Volume increased 5%, with growth in each operating segment.
Income from operations rose 17% to USD169.2m from the prior year period, and included USD1.7m of costs related to the spinoff from Conagra Brands, Inc. (formerly ConAgra Foods, Inc., “Conagra”), compared with USD5.1m of expenses incurred in the prior year period related to the spinoff from Conagra.
Excluding these comparability items, income from operations grew USD20.6m, or 14%, driven by higher gross profit. Gross profit increased USD36.9m, due to favorable price/mix and volume, partially offset by packaging, commodity, manufacturing, transportation and warehousing cost inflation, and higher depreciation expense primarily associated with the company’s new French fry production line in Richland, Washington. The rise in gross profit was partially offset by a USD16.3m increase in selling, general and administrative expenses, excluding comparability items.
Net sales for the global segment, which is comprised of the top 100 North American based restaurant chain customers as well as the company’s international business, increased 15% to USD448.7m.
For the Foodservice segment, which services North American foodservice distributors and restaurant chains outside the top 100 North American based restaurant chain customers, net sales increased 5% to USD253.5m.
For the retail segment, which includes sales of branded and private label products to grocery, mass merchant and club customers in North America, the net sales increased 31% to USD130.2m.
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