The demand for chips is good and potato processor Lamb Weston is able to take advantage of that. Net sales amply exceeded expectations in the second quarter of the broken fiscal year. The company announced this on Thursday, January 6. Looking ahead to the second half, it expects net sales to remain above its long-term target.
Net sales for the second quarter amounted to $1.007 million. That is a growth of 12% compared to the same quarter a year earlier. The gross margin (Ebitda), on the other hand, has shrunk by 15% compared to the second quarter of last year and amounts to $181 million. Net profit fell 66% to $33 million.
Good prospects
“We are pleased with the financial and operational progress as we navigate a difficult, volatile macro environment driven by cost inflation, supply chain disruptions and manufacturing challenges (due to a tight labor market),” said CEO Tom Werner in the explanation of the figures. The sales growth is a result of good demand from restaurant and foodservice channels in North America. “The pricing actions, along with other strategic actions to offset costs and improve throughput at our plants, have resulted in positive gross margin gains.”
According to Werner, Lamb Weston is on track to meet its financial year targets. The CEO does warn that we must remain focused on efficiency in the returns of production locations. "We anticipate higher costs for potatoes due to an exceptionally poor harvest in the American Pacific Northwest. We remain confident in continued strong global demand for frozen potato products in the long term."