Thursday, 21 September 2017

 

Tom Werner, President and CEO of Lamb Weston, says that the company anticipates the operating environment to remain generally favorable, with solid demand growth for frozen potato products across most of the markets.

“We expect the industry’s production capacity to continue to be constrained, especially in North America. We are confident in our ability to build upon the momentum that we have created, leverage our investments in additional capacity to support our customers, execute our strategies and win in the marketplace to deliver on our outlook for the year,” says Werner.

For fiscal 2018, the Company expects:

  • Net sales to grow low-to-mid single digits, with price/mix and volume growth improving in the second half of the year as new pricing structures for an increasing number of customer contracts become effective and as the Company’s new processing capacity becomes available.
  • Adjusted EBITDA including unconsolidated joint ventures in the range of USD740m to USD760m, including higher selling, general and administrative expenses as a percentage of sales due to the full-year impact of incremental costs associated with being a stand-alone public company, as well as higher advertising and promotional expense in support of the launch of the Company’s Grown in Idaho product line in retail. Using the mid-point of the range, this represents an increase of approximately 8% versus a fiscal 2017 pro forma Adjusted EBITDA including unconsolidated joint ventures of USD692m.

Sensible Growth for Fiscal Year 2017

Lamb Weston Holdings, Inc. announced its fourth quarter and full year 2017 results, with income from operations risen 136% to USD122.5m from the prior year period and included USD2.8m of costs related to the spinoff from Conagra Brands.

The company also announced net sales of USD832.5m, up 7% versus the year-ago period. Volume increased 4%, with growth across all business segments. Price/mix increased 3% due to pricing actions and favorable product and customer mix.

Most of the increase reflects the impact of USD64.1m of expenses incurred in the prior year period, including pension charges for actuarial losses and costs related to the spinoff. Excluding these comparability items, favorable price/mix and volume, as well as supply chain efficiency savings, largely drove the growth in income from operations, partially offset by packaging, manufacturing, edible oil and transportation and warehousing cost inflation. 

In addition, selling, general and administrative expense rose, largely due to incremental costs associated with being a stand-alone public company, as well as higher incentive compensation costs attributable to the Company’s operating performance.

Net sales for the Global segment, which is comprised of the top 100 North American based restaurant chain customers as well as its international business, increased 6% to USD421.4m. Volume increased 4%, driven by growth in both domestic and international markets. Price/mix increased 2%, largely reflecting price increases and improvement in customer and product mix.

Global Segment Product Contribution Margin increased 10% to USD83.9m, primarily driven by favorable volume and price/mix.

Net sales for the Foodservice segment, which services North American foodservice distributors and restaurant chains outside the top 100 North American based restaurant chain customers, increased 9% to USD277.0m. At the same time, net sales for the Retail segment, which includes sales of Alexia branded, licensed branded and private label products to grocery, mass merchant and club customers in North America, increased 5% to USD99.0m.   

Related articles: 

Lamb Weston/Meijer Completes Acquisition of Oerlemans’ Potato Division 

Lamb Weston Introduces “Grown In Idaho” Brand 

ConAgra Foods and Lamb Weston Start Their Planned Spin-off

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