Improved sales volumes in Lamb Weston, Inc.’s Global and Foodservice business units propelled the potato processor’s net income up 18% during the second quarter of fiscal 2020, according to a report by Baking Business.
Net income for the quarter ended Nov. 24, 2019, totaled $140.4 million, equal to 96c per share on the common stock. It was an increase when compared with the same period of the previous year when the company earned $119 million, or 74c per share.
Quarterly sales rose 12% to $1,019.2 million. Lamb Weston’s Retail unit experienced a 7% rise in sales during the quarter to $132.1 million.
“In the second quarter, we delivered strong sales, volume and earnings growth across each of our core business segments by continuing to execute well across the organization,” said Tom Werner, president and chief executive officer. “We’re generating strong cash flow, and we’re investing that cash back into the business to support customer growth, improve manufacturing operations and systems, and bolster our presence in key markets such as Australia and South America.”
As a result, the company raised its guidance for the full year. Lamb Weston’s sales growth rate is now expected to fall at the high-end of the mid-single digit range, and management increased the company’s EBITDA range from $950 million to $970 million from $965 million to $985 million.
The positive news is challenging management on several fronts, most notably capacity utilization to keep pace with demand and a less-than-ideal potato crop year. Despite a weak potato crop year in some parts of the world, Mr. Werner sought to reassure investors that Lamb Weston would not be adversely affected.