Lamb Weston Reports Strong Financial Performance, Expects Positive Trend

Lamb Weston Holdings’ president and CEO Tom Werner anticipates the fiscal year for 2019 will remain favorable, with continued solid global demand growth for frozen potato products and high processing capacity utilization levels in North America.

The comment was made as Lamb Weston presented its fourth quarter and full year 2018 results, and provided its outlook for fiscal 2019.

For the fourth quarter, Lamb Weston recorded net sales of USD918.2m, up 10% compared with the similar year-ago period. Price/mix increased 8% due to pricing actions and favorable product and customer mix. Volume increased 2%, with growth in each core-operating segment.

Income from operations rose 9%, to USD133.5m from the prior year period, and included USD0.8m of pre-tax costs related to the spinoff from Conagra Brands, Inc. In November 2016, Lamb Weston announced today that it has completed the previously announced spinoff from Conagra Brands, Inc. (formerly ConAgra Foods, Inc.).

For the fiscal year 2018, net sales were USD3,423.7m, up 8% compared to fiscal 2017. Price/mix increased 6% due to pricing actions and favorable product and customer mix. Volume increased 2%, with growth in each core-operating segment.

Income from operations rose 12% to USD580.1m from the prior year, and included USD8.7m of costs related to the spinoff from Conagra. Fiscal 2017 included USD26.5m of expenses related to the spinoff from Conagra and an USD3.1m non-cash gain on assets. Excluding these comparability items, income from operations grew USD47.1m, or 9%, driven by higher gross profit.

Gross profit increased USD100.7m, due to favorable price/mix, volume and supply chain efficiency savings. The increase was partially offset by transportation, warehousing, input and manufacturing cost inflation, higher depreciation expense primarily associated with the company’s new French fry production line in Richland, Washington, and higher incentive compensation costs.

“We’re pleased with our strong performance in the quarter and for the full year, and feel good about the operating momentum that we’ve built. Our financial results reflect the favorable operating environment that we’ve enjoyed over the last couple of years. They also reflect our continued focus on delivering on our strategic and operational objectives through an ongoing commitment to support our customers’ growth by investing in additional capacity, maintaining high levels of service, and developing innovative products and limited time offerings,” Werner comments.

For the next fiscal year, the company expects net sales to grow mid-single digits, with price/mix higher in the first half of fiscal 2019 versus the second half of the year, reflecting the carryover impact of customer contract pricing structures that took effect beginning in the second half of fiscal 2018.

“We’re targeting another year of strong sales growth, driven by a good balance of higher price/mix and volume. We also expect to deliver another year of solid earnings growth by offsetting input, manufacturing and distribution cost inflation, while significantly stepping up investments to improve operating efficiency and drive growth over the long term. By continuing to support our customers’ growth and executing our strategies, we believe that we remain well-positioned to create value for our shareholders in fiscal 2019 and beyond,” Lamb Weston’s CEO adds.