Tuesday, 17 July 2018

 

Lamb Weston Holdings has announced an expansion of French fry processing capacity in North America and an increase in its quarterly dividend. 

The company announced an investment to expand operations at its Hermiston, Oregon, processing facility, with the construction of a 300m pound-per-year, state-of-the-art French fry line. The new line will be modeled on the company’s recently operational production line in Richland, Washington, and is expected to be completed in the fourth quarter of fiscal 2019. 

The new Hermiston line is intended to support growth in North America, as well as exports to Asia, where demand growth has been, and is expected to remain, strong. The expansion is expected to add approximately 170 full time positions.

“The French fry category has been growing at attractive rates around the world, and we believe industry capacity has been challenged in recent years to keep up with continued growth in market demand,” said Tom Werner, president and CEO of Lamb Weston. “This investment in a new French fry processing line in the ColumbiaBasin reflects Lamb Weston’s continued commitment to support our strategic partners as they continue to grow their businesses in North America and abroad.”

Oregon Gov. Kate Brown has approved an award from the state’s Strategic Reserve Fund to help move the project forward. The award is intended to support infrastructure development at the site and workforce training and diversification.

“In addition to supporting our rural economies and booming agriculture industry, this investment provides critical workforce training opportunities in well-paying jobs in Eastern Oregon,” Brown said. 

The total investment for the new line is expected to be approximately USD250m, with capital expenditures of approximately USD25m and USD225m in fiscal years 2018 and 2019, respectively.

Financial Results and Outlook for 2018

Lamb Weston Holdings announced its second quarter 2018 results and updated its outlook for fiscal 2018.

The company recorded net sales of USD824.6m, up 4% versus the year-ago period. Price/mix increased 5% due to pricing actions and favorable product and customer mix. Volume declined 1%, as compared to a 4% increase in the prior year quarter.

Income from operations rose 11% to USD139.8m from the prior year period, and included USD4.0m of costs related to the spinoff from Conagra Brands.

Income from operations grew USD9.3m, driven by favorable price/mix, partially offset by commodity, manufacturing, transportation and warehousing cost inflation, higher depreciation expense and approximately USD3m of costs related to the start-up of the Company’s new French fry production line in Richland, Washington.

For the fiscal year 2018, Lamb Weston expects that net sales to grow mid-single digits. 

Related articles: 

Lamb Weston Announces Plans in Packaging Recycling and Reducing Waste 

Lamb Weston Expands Operations in Richland 

Net Sales Grow in Food Service and Retail for Lamb Weston in Q1 2018 



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