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Feb 28, 2021
Lamb Weston Q3 2021 Earnings Report
Lamb Weston's financial performance declined due to the impact of COVID-19 on manufacturing and distribution operations, resulting in lower sales and higher costs.
Key Takeaways
Lamb Weston reported a decrease in net sales, income from operations, net income, and diluted EPS for the third quarter of fiscal year 2021 compared to the same period last year. The decline was attributed to the impact of COVID-19 on manufacturing and distribution operations, leading to lower sales and higher costs.
Net sales declined 4% to $896 million.
Income from operations declined 38% to $101 million.
Net income declined 41% to $66 million.
Diluted EPS declined 41% to $0.45.
Lamb Weston
Lamb Weston
Forward Guidance
The Company expects to continue to incur significant costs as a result of the pandemic’s ongoing impact on its manufacturing, distribution, commercial and functional operations until the COVID-19 virus is broadly contained.
Positive Outlook
- The gradual improvement in frozen potato demand will continue to the extent governments further lift social restrictions, and as warmer weather provides more outside dining opportunities.
- The ongoing disruptive effects of COVID-19 on our supply chain will continue to pressure near-term costs, but should also lessen after vaccines become more widely available for our manufacturing teams and our supply chain partners.
- Overall demand in the U.S. will steadily return to pre-pandemic levels around the end of calendar 2021.
- Global category growth will resume at historical rates soon thereafter.
- The possibility of wide availability of government-approved COVID-19 vaccines by mid-calendar 2021 may allow governments to gradually ease broad social restrictions in their respective jurisdictions, which would likely have a favorable impact on restaurant traffic.
Challenges Ahead
- COVID-19 continued to significantly disrupt our manufacturing and distribution operations across our entire supply chain network, which resulted in higher costs.
- Governments across parts of Europe have reimposed stricter social restrictions to curb another resurgence of COVID-19.
- Shipments to non-commercial customers, which have historically comprised approximately 25 percent of the segment, will remain soft for the remainder of its fiscal 2021 fourth quarter.
- Consumers are expected to increase purchases away from home.
- The Company expects to continue to face challenging and volatile operating conditions until the virus is broadly contained.