Frozen potato products maker Lamb Weston reported a 19% growth in net sales to $1 billion in the fourth quarter of its financial year.
Net income increased to $66 million in this period from a loss of $2 million in the same period last year.
Adjusted EBITDA including unconsolidated joint ventures increased 112% to $166 million during the quarter, driven by higher income from operations and equity method investment earnings.
Tom Werner, president and CEO of Lamb Weston, said, “ We’re encouraged by the pace of recovery in US restaurant traffic, especially at full-service restaurants, and continue to expect that overall US french fry demand will return to pre-pandemic levels around the end of calendar 2021.
“We also anticipate that demand in Europe and in our key export markets will steadily improve as vaccines become more widely available and vaccination rates increase in those markets.”
The company’s net sales declined by 3% year on year to $3.7 billion for the full financial year, with volume down 6% and price/mix up 3%.
Net sales and volume declined 2% and 6%, respectively, excluding the benefit of the 53rd week in the prior year.
The decline in sales volume was driven by weak demand for much of the first three fiscal quarters following government-imposed pandemic-related social restrictions on restaurants and other foodservice channels.
Net income declined 13% to $317.8 million in the full financial year due to a decline in income from operations and higher interest expense, partially offset by higher equity method investment earnings.
Adjusted EBITDA including unconsolidated joint ventures(1) declined $51.4 million to $748.4 million, down 6% compared to the previous year.
Lamb Weston has forecast fiscal 2022 net sales growth to be above its long-term target of low-to-mid single digits.
The company anticipates net sales growth in the first half of the financial year 2022 will be primarily driven by higher volume, reflecting an ongoing recovery in frozen potato demand, as well as a comparison to relatively soft shipments in the prior year.
It expects net sales growth in the second half of the year to reflect a balance of higher volume and improved price/mix as recent pricing actions are fully implemented and sales volumes in higher-margin channels approach pre-pandemic levels.
Impact Of Pandemic
The company noted that the pandemic will continue to impact its earnings in the near term as the pandemic has disrupted supply chain operations across all the globe, resulting in significant input and transportation cost inflation as well as a tighter labour market.
Werner added, “Having seen the resiliency of french fry demand during the pandemic, we remain confident in the long-term health and growth prospects for the global category, and are committed to supporting this growth and our customers by investing in new capacity.
“Along with driving margin improvement by improving product and customer mix, pricing to offset inflation, and executing on our lean manufacturing initiatives, we believe we’re well-positioned to drive sustainable, profitable growth and create value for our stakeholders over the long term.”