Lamb Weston Raises Full-Year Forecasts on Strong Sales and Easing Costs

Lamb Weston Holdings, a leading supplier of frozen potato appetizers, has raised its full-year net sales and profit forecasts, citing higher prices for its ready-to-cook products and easing cost pressures. The company’s shares surged by 10% following the announcement.

Lamb Weston, which supplies fast food giant McDonald’s, strategically increased product prices over the past year to protect its margins. The company is now benefiting from a reduction in input costs, which have started to ease from their peak levels.

The Idaho-based company reported a 23% increase in overall average selling prices, while volumes declined by 8%. This decline was primarily due to Lamb Weston’s decision to exit some lower-priced and lower-margin businesses, as well as destocking by retailers in the Asia-Pacific region.

Lamb Weston now expects its full-year 2024 net sales to range between $6.8 billion and $7.0 billion, surpassing its previous forecast of $6.7 billion to $6.9 billion. This positive outlook aligns with the comments made by packaged food peer Conagra Brands, which also exceeded first-quarter profit estimates due to price increases.

Furthermore, Lamb Weston raised its earnings per share forecast for the full-year 2024 to be between $5.47 and $5.92, compared to the previous range of $4.95 to $5.40. Excluding items, the company reported earnings per share of $1.63, surpassing the average analyst estimate of $1.08 per share.

The strong performance of Lamb Weston reflects its ability to adapt to market conditions and make strategic decisions to enhance profitability. With the demand for frozen potato appetizers remaining robust, the company is well-positioned to continue its growth trajectory.

Overall, Lamb Weston’s positive forecast and financial results demonstrate its resilience and strategic approach in navigating the challenges of the food industry.