Lamb Weston Holdings, Inc. Financial Results for Q2 of 2024 Are ‘Below Expectations’
Thomas Werner, the former President and CEO of Lamb Weston Holdings, Inc., announced that the company’s financial results for Q2 of 2024 were below expectations, due to ‘higher-than-expected manufacturing costs’ and ‘softer volumes’.
“Our financial results in the second quarter were below our expectations. Higher-than-expected manufacturing costs and softer volumes accounted for the shortfall, while price/mix and operating expenses were broadly in line with our targets for the quarter. In terms of the broader operating environment, we expect challenging conditions to persist through the remainder of fiscal 2025 and into fiscal 2026, driven primarily by an accelerating rate of capacity additions and continued near-term softening of global frozen potato demand below historical rates, particularly outside North America, until demand trends improve and capacity expansion normalizes. As a result, we are reducing our fiscal 2025 financial targets,” Thomas Werner mentioned.
He added that the company continues to take prudent steps to successfully adapt to this dynamic environment.
“In addition to the cost benefits we expect to realize from our Restructuring Plan, including our previously announced actions to permanently close or temporarily curtail production lines to better manage our factory utilization rates, we are actively evaluating additional cost-savings opportunities as we work to better align our operations with the current environment. This includes efforts to reduce manufacturing and supply chain costs and operating expenses to protect and improve profitability. We are executing with urgency and discipline to make lasting improvements to our operations as we weather what we believe are transitory challenges, and we remain focused on leveraging our solid fundamentals and balance sheet to deliver value to shareholders,” Werner also mentioned.
Lamb Weston Holdings, Inc. net sales declined USD131.2m, to USD1,6bn, down 8% versus the prior year quarter. Volume declined 6%, largely reflecting the impact of soft global restaurant traffic trends; customer share losses, net of gains; and the carryover effect of the Company’s decision in the prior year to exit certain lower-priced and lower-margin business in Europe to strategically manage customer and product mix.
Price/mix declined 2%, reflecting the impact of planned investments in price and trade support to attract and retain volume in North America, pricing actions in key international markets in response to a more competitive environment, and unfavorable channel and product mix. The decline in price/mix was partially offset by the benefit of inflation-driven pricing actions in EMEA.
