Fourth quarter net sales fell 5% to $1,612 million for Eagle, Idaho, USA-headquartered frozen potato products producer Lamb Weston. Income from operations increased 14% to $213 million, while net income fell 74% to $130 million. Diluted EPS declined 74% as well, to $0.89.
“We are disappointed by our fourth quarter performance,” said President and CEO Tom Werner in no uncertain terms. “Our price/mix results were below expectations, while market share losses and a slowdown in restaurant traffic in the United States and many of our key international markets were greater than expected. We also incurred losses related to a voluntary product withdrawal.”
He added: “We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic. This has resulted in an increase in available capacity in North America and Europe. We believe this supply-demand imbalance will persist through much, if not all, of fiscal 2025. Accordingly, we are making some operating adjustments in the near term to fit the macroeconomic reality and business environment, including reinvigorating volume growth, targeted investments in price and trade support, decisive measures on cost, supply chain productivity initiatives, and a re-phasing of investments to modernize production capabilities to better match the demand environment.
“Despite these near-term headwinds, we remain focused on executing on our long-term strategies, and improving customer service. We believe the actions we are taking to continue to strengthen our portfolio and capabilities, position us well to continue to support our customers and create value for our stakeholders over the long term.”
Full Year Fiscal 2024 Highlights
For the entire fiscal year, in comparison with 2023 results, net sales increased 21% to $6,468 million, including $1,107 million of incremental sales attributable to acquisitions. Income from operations rose 21% to $1,065 million, while net income fell 28% to $726 million.
Q4 2024 Segment Highlights
Net sales in North America segment, which includes all sales to customers in the USA, Canada and Mexico, declined $47.3 million to $1,113.2 million, down 4 percent versus the prior year quarter. Volume fell 7 percent, with approximately five percentage points of the decline due to share losses, and approximately two percentage points largely attributable to soft restaurant traffic trends in the United States.
Price/mix increased 3% as the carryover benefit of inflation-driven pricing actions taken in late fiscal 2023, as well as pricing actions for contracts with large and regional chain restaurant customers in fiscal 2024.
North America Segment Adjusted EBITDA declined $21.4 million, or seven percent to $276.5 million. Lower sales volumes, and an approximately $19 million charge for the voluntary product withdrawal related to products manufactured in North America, drove the decline, while the benefit of inflation-driven pricing actions more than offset higher costs per pound.
International
Net sales for the International segment, which includes all sales to customers outside of North America, declined $35.7 million, or seven percent to $498.7 million. Volume fell 9 percent, with nearly five percentage points of the decline from share losses, which are due in part to the company’s decisions to exit certain lower-priced and lower-margin business in LW EMEA earlier in the year. More than two percentage points of the volume decline reflects the voluntary product withdrawal, with the remaining approximately two percentage points of the decline largely attributable to soft restaurant traffic trends in key international markets. Price/mix increased 2 percent due to inflation-driven pricing actions taken in fiscal 2024, as well as the carryover benefit of pricing actions taken in fiscal 2023.
International Segment Adjusted EBITDA declined $43.2 million or 52 percent, to $40.4 million. An approximately $21 million charge associated with the voluntary product withdrawal, lower sales volumes, higher costs per pound, and higher A&P investments to support the launch of retail products in Europe drove the decline, partially offset by the benefit of inflation-driven pricing.
