Lamb Weston, the potato products company, has reported higher sales for its fiscal fourth quarter and has expressed an optimistic outlook for the next 12 months as it continues to raise prices.
Financial Performance
In the three months ended May 28, Lamb Weston recorded a profit of $498.8 million, or $3.40 per share, compared to $32.0 million, or 22 cents per share, in the same period last year. After excluding one-time items, adjusted earnings came in at $1.22 per share, surpassing analysts’ expectations of $1.04 per share.
Furthermore, revenue saw a significant increase of 47% to $1.69 billion, primarily driven by the acquisition of the remaining stake of joint ventures in Europe and Argentina, adding $380.9 million to sales. Analysts surveyed by FactSet had predicted sales of $1.66 billion.
Outlook for Fiscal-2024
Lamb Weston has provided its outlook for fiscal 2024, expecting earnings in the range of $4.95 to $5.40 per share on sales of $6.7 billion to $6.9 billion. This projection comes slightly below analysts’ expectations of $5.00 per share on sales of $6.79 billion. The company anticipates sales growth of 6.5% to 8.5%, excluding the impact of acquisitions from former joint ventures, primarily due to price increases.
Pricing Strategy
Similar to its industry peers, Lamb Weston has been strategically increasing prices to mitigate rising costs. In the fourth quarter, the company witnessed a 24% surge in sales due to higher prices and a more profitable mix of products sold. However, sales volumes declined by 10% as customers resisted the price hikes. Despite this, Lamb Weston remains confident that higher pricing will continue to drive sales growth in the coming year, although volumes are expected to face pressure.
Conclusion
Investors responded positively to Lamb Weston’s confidence in its pricing power, as the company’s shares rose by nearly 4%.
