Potato processor Lamb Weston released the fourth quarter results of the broken fiscal year 2020/2021 last week. The company posted a profit of $66 million compared to a loss of $2 million in the same quarter a year earlier. Lamb Weston also looked ahead to the new season during the presentation.
For the 2021/2022 financial year, Lamb Weston expects growth above the multi-year target in 'low to mid single digits'. The first half of the year is mainly expected to consist of more product volume. Due to the recovery after the corona pandemic, the demand for potato products is increasing again. Especially compared to the weak sales a year earlier.
In the second half of the financial year, the company expects to improve the margin on its products in addition to growth in volume. The recent price changes will then have been fully implemented and demand for products from the higher segment in particular (with a larger margin) will return to pre-corona levels.
Market recovers with vaccination
“The chip market is more predictable compared to a year ago, but the lingering effects of the pandemic and the strong recovery of the US economy have disrupted the supply chain across all industries including ours,” said Tom Werner CEO of Lamb Weston in a written explanation of the figures. "We expect demand for fries in the US to return to pre-coronavirus levels by the end of the 2021 calendar year. Demand in Europe and other key markets is also growing as vaccination rates increase."
Lamb Weston expects to be affected by inflation in the short term. The prices of frying oil, packaging materials and transport in particular are rising rapidly, according to the company. It is striking that the availability of potatoes is hardly mentioned. Major growing regions in the US and Canada are experiencing extreme heat and drought, but this has had little impact on yields and quality for early varieties, according to Lamb Weston. The company does expect a possible negative effect on the main harvest, although it is still too early to say anything about this.
Less confidence
Investors appear to have less confidence in a speedy recovery of the French fries market. The Lamb Weston share price fell by 13% after the quarterly and annual results were announced.
Boerenbusiness organizes a round table discussion at the beginning of September about the future of potato cultivation and the chip market. Prominent companies in the sector are joining us. Do you have questions for the experts on this subject? Send them to before August 25th d.ballast@boerenbusiness. Nl