Dive Brief:
- Lamb Weston reported another quarter of growth, with net sales increasing 7% to $833 million and income increasing 136% to $123 million, according to the company's earnings report.
- The frozen potato products company saw growth across the board, with a 5% increase in retail net sales compared to a year ago and a 9% increase in net sales in foodservice over the same time period.
- “Looking ahead to fiscal year 2018, we anticipate the operating environment to remain generally favorable, with solid demand growth for frozen potato products across most of our markets," President and CEO Tom Werner said in the report. "... We are confident in our ability to build upon the momentum that we have created, leverage our investments in additional capacity to support our customers, execute our strategies and win in the marketplace to deliver on our outlook for the year.”
Dive Insight:
Still in its first year as a standalone company after being spun off from Conagra Brands, Lamb Weston is living up to analysts' expectations as a lucrative and successful business venture. This is its third earnings report as a solo company, and it has not yet disappointed in terms of profits and growth.
The future outlook for Lamb Weston also looks bright. As the company finished its 2017 fiscal year, it projects a net sales increase at a low-to-mid single digit rate and total EBITDA to reach $740 million to $760 million for the year.
The bullish guidance comes as the frozen potato market is expected to grow. While demand outpaces production capacity, especially in North America, Lamb Weston is ready to handle increased demand, according to Werner. The company has 22 manufacturing facilities in North America, Europe and China, and started its facility expansion last year with a new french fry processing line at its Richland, Washington plant and adding new capacity for making hash brown patties and potato puffs at its Boardman, Oregon plant.
As a former division of one of the largest food companies in the U.S., Lamb Weston is already the market leader for frozen potatoes. With Conagra's history behind it, as well as the connections and market share forged by such a large company, Lamb Weston's success right now is primarily being driven by consumer demand for potato products — something that doesn't appear to be going away any time soon.