Demand for potato products remains low, causing LambWeston to scale back production and buy out contracts. This results in write-downs and pressure on the result. Read more about the impact of potato surpluses on processing.
It is LambWeston's international operations that are under pressure. This includes the Dutch factories. Production lines have been shut down more frequently and for longer periods due to lower demand. Potato contracts have been bought out to better align supply with adjusted production schedules.
Sales volume in LambWeston's international segment fell by 2% from December through February compared to a year ago. On top of that, the group incurred a 7% price drop due to lower demand for potato products in key markets.
Nevertheless, the decline in revenue at the international branches in the third quarter of fiscal year 2026 remained limited to 1% to $530 million, equivalent to approximately €460 million. This is because the dollar weakened significantly during this period. The currency effect amounted to $43,7 million, or €38 million. This exchange rate effect was greater than the net charge on surplus potatoes.
EBITDA from international operations decreased by $75,6 million to $18,5 million in the past quarter. The write-down on the potato surplus accounted for a significant share of this. This was exacerbated by underutilization of factories, resulting in relatively higher production costs.
Factory closures
To improve factory utilization, LambWeston decided to close the Argentine factory in Munro. Production has been relocated to the more modern factory in Mar del Plata. In addition, a production line in the Netherlands has also been shut down. According to the group, this is temporary, but there is no end date.
The factories in North America are clearly performing better. In the United States, Canada, and Mexico, sales volume increased by 12%. There are more customers and more market share, according to LambWeston. However, there is also a price decrease of 7% there. EBITDA declined slightly by $12,8 million to $289,8 million, more than 15 times higher than in the international segment.
LambWeston's share price has recently fallen to below $40 per share, which is the lowest level since the spring of 2017.