Lamb Weston (LW) 2021 Q3 Financial Results

The history of Lamb Weston Holdings Inc (NYSE:LW) dates back to 1950 when founder Frank Gilbert “Gib” Lamb incorporated Lamb Weston to capitalize on the booming frozen food industry at that time. The company grew over the years to become one of the world’s biggest producers of frozen potato products.

Lamb Weston recently announced mixed financial results for the third quarter. It reported earnings of $66.1 million, or 45 cents per share for the three months ended February 28, down from $111.4 million, or 76 cents per share in the comparable quarter of 2020.

Excluding certain items, adjusted profit decreased 42 percent to 45 cents per share, and missed the consensus estimate of 51 cents per share. The drop was mainly attributed to the pandemic-related hurdles in manufacturing and supply operations that resulted in higher costs.

Revenue for the quarter slipped 4 percent on a year-over-year basis to $895.8 million but surpassed analysts’ average forecast of $816.5 million. If we look at the performance of key segments, revenue from the foodservice business declined 22 percent to $219.5 million. On the bright side, retail revenue jumped 23 percent to $162.5 million in the quarter.

Meanwhile, volume decreased 6 percent in the quarter amid weak demand for frozen potato products. Restaurants and other food businesses were forced to limit their operations during the pandemic that negatively affected the demand for Lamb Weston’s products.

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Commenting on the results, CEO Tom Werner said in a statement, “We delivered solid sales volumes during the quarter as consumers and full-service restaurant traffic responded favorably to the gradual easing of broad social restrictions as the quarter progressed, as well as to the benefit of relatively mild winter weather for much of the period. However, COVID-19 continued to significantly disrupt our manufacturing and distribution operations across our entire supply chain network, which resulted in higher costs.”

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