The listed American chip group LambWeston has fallen sharply on the stock exchange. The reason for this is the company's disappointing results, in combination with gloomy prospects in the market.
Lamb Weston yesterday reported the annual figures for the broken financial year 2023/24, including the separate figures for the fourth quarter. This did not give much reason for optimism. In fact, the company is clearly in rougher waters. In the latest quarter, which ended in June, sales fell 5% to $1,6 billion.
Bottom line, profits plummeted by as much as 40% to $114 million. Over the entire financial year, turnover increased by 21% to $6,4 billion, but income fell by just under 30% to $726 million. CEO Tom Werner aptly spoke of disappointing figures, although the profit margin on paper still does not look very mediocre.
2025 will also be challenging
The CEO also predicts a challenging year for 2025. The demand for frozen fries has fallen sharply over the past twelve months. According to him, high inflation is causing less consumption outside the home in North America and Europe, the group's two largest markets.
Although sales figures are not mentioned, the decreased turnover in the last quarter suggests that sales are under pressure. Werner does not say it in so many words, but does hint that chip production may be scaled down. He also indicates that he will take targeted actions to restore demand, without becoming more specific.
Course down
After the figures were published, the share fell sharply. The price, which had been quite stable for a long time, fell by almost 30% to $56,42 per share. This is the lowest level in more than two years. An interesting detail is that many stock market analysts had the chip group on the buy list after the earlier share price fall in April.