Potato processing giant Lamb Weston reports 12% sales decline for second quarter
Lamb Weston Holdings, a large potato processor and publicly traded company, reported second-quarter net sales of $896.1 million, a decline of 12% from the previous year.
The second quarter, which included the months of September, October and November 2020, were influenced by continued soft sales in foodservice due to COVID-19 closures and restrictions, Lamb Weston President and CEO Tom Werner said through a press release.
“We delivered solid financial results in the quarter, and we remain encouraged by the resiliency of consumer demand and the resourcefulness of our employees and our customers in adapting to this challenging environment,” Werner said. “We are optimistic that the availability of COVID-19 vaccines will enable a gradual return to normalcy as the year progresses, but we expect to continue to face difficult and volatile operating conditions until the virus is broadly contained. Specifically, we expect demand will remain soft in the coming months, especially at full-service restaurants, as governments continue to impose broad social restrictions and as colder weather limits outdoor dining. That said, we expect demand at quick service restaurants and at retail outlets to offset some of that weakness.”
“Despite these near-term pressures, we believe that restaurant traffic may approach pre-pandemic levels later this calendar year if vaccines and other measures are successful in helping to broadly contain the virus and restrictions on restaurants and other venues are lifted to permit a large-scale return to on-premise dining. In the meantime, our business fundamentals — pricing, capacity utilization, and potato supply — remain solid, and we continue to manage through the pandemic’s impacts on our manufacturing operations. We believe our recently announced increase in our quarterly dividend and the planned resumption of our share repurchase program reinforce our conviction in the long-term strength of the category and our business, as well as our ability to support customers and create value for our stakeholders.”
Lamb Weston expects North American and European shipments to remain soft through the third quarter, as cold weather and government-imposed restrictions will continue to hinder foodservice sales.
Overall second-quarter highlights include:
- Net sales declined 12% to $896 million
- Income from operations declined 28% to $140 million
- Diluted EPS declined 31% to $0.66
- EBITDA including unconsolidated joint ventures declined 18% to $213 million
- Paid $34 million in dividends to shareholders and announced a 2% increase in quarterly dividend
- Plan to resume share repurchase program in January 2021