Erratic season does not weaken Lamb Weston

For the quarter ending November, Lamb Weston posted positive earnings of $140,4 million. A year earlier, this quarter was worth $119 million. It reflects the high international demand for frozen potato products such as fries. Sales rose 12% to $1,01 billion.

Average harvest in Idaho
In a conference call, general manager Tom Werner said he was aware of the difficult potato season, but he also reassured shareholders. “The potato yield in the American growing areas in Idaho and the Columbia Basin is average, which means our factory can perform as expected.”

This is different in the growing areas in Minnesota, USA and the Canadian province of Alberta. The yield there is lower, but Werner assures his shareholders that production will return to a normal level. Because the concentration of production is in the first 2 areas, the company does not foresee any major problems. In addition, Lamb Weston has purchased additional potatoes on the open market where necessary. “We are confident that we have sufficient raw material for the current financial year to maintain our proposed growth rates.”

More turnover
Furthermore, Lamb Weston continues to pump money into growth markets such as Australia and South America. For the full financial year, EBITDA (earnings before depreciation and tax) is now expected to be in the range of $970 million to $985 million. Previously it was $950 to $965 million.

“We have built 2014 new production lines for frozen fries since 3,” says Werner. “Capacity utilization is above our expectations, because there is more demand than expected. We are not announcing any further production increases for now, but will continue to search worldwide for opportunities that can realize this.”

More product sold
In terms of product volume, 5% growth was achieved in the second quarter. Mainly due to more product sold under our own label and private label. Half of this growth comes from more workable days spent exporting.