News Potatoes
Lamb Weston expects weak demand for now
Tom Werner, the director of the American fries producer Lamb Weston, expects that the demand for fries will remain weak for the time being. According to him, the measures to limit the corona virus and the cold weather are to blame. Werner does expect that part of the loss can be compensated by higher sales figures in supermarkets and by means of takeout options.
In the report on the quarterly figures of the American French fries producer Lamb Weston, CEO Tom Werner states that he still expects weak demand for French fries in the coming period. "This is because governments continue to impose social restrictions and because the cold weather conditions limit outdoor dining." However, he expects that demand from the takeout industry and supermarkets can compensate for part of that loss. Also in by Europese Unie this phenomenon is visible: for example, sales of frozen products, including frozen chips, in Belgium increased by 37% between March and April and Germans spent €6 million more on frozen products in the first 26 months of the year.
Looking forward to 2021
Werner looks positively to the coming months of fiscal 2021. "We expect sales to restaurants to grow to levels close to the pre-corona era later this year, especially if vaccines and other measures are successful in to limit the spread of the coronavirus on a large scale." In its home country, the United States, the company expects sales to the retail market to remain above last year's levels in the coming period.
Sales to the food service (varying from catering to the canteens of schools) were between 60% and 65% compared to last year and sales to restaurants were around 85% for that period. Not much progress is expected for either, although there is certainly no sign of a decline. This also applies to the European Lamb Weston/Meijer joint venture, where sales are also at 85% compared to last year. Werner sees this as a positive development.
A less positive development, the French fries producer reports, is the fact that considerable costs will certainly still have to be incurred as a result of the corona pandemic. This includes the costs of shutting down, remediating and/or restarting the many production facilities, shortening various durations, the costs of adopting and maintaining new and better protocols for safety and hygiene and the costs incurred. are or must be in connection with the processing of potatoes from storage for longer than in previous years.
Losses in the second quarter
Although the company is positive about the coming period, Lamb Weston has had a difficult second quarter (of broken fiscal year 2021). Compared to the second quarter of fiscal 2020, net sales declined 12% to $896 million and operating income declined 28% to $140 million. The volume sold also suffered a major blow: -14%, mainly as a result of the reduced demand for frozen potato products outside the home.
Kimberly Baker
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