Lamb Weston (LW 56.44, +0.38) trades higher by 0.7% in response to a slim earnings beat and improved guidance.
The supplier of frozen potato products reported above-consensus second quarter earnings of $0.54 per share on a 4.3% year-over-year increase in revenue to $824.60 million, which was also better than expected.
The company, which was spun-off from Conagra Brands (CAG 37.32, -0.01) in November 2016, reported year-over-year sales growth in all three of its segments. However, revenue at the company's largest segment—Global—increased just 1.0% to $416.90 million. Price/mix increased 3.0%, mostly due to price increases, while volume declined 2.0%. The company blamed the elimination of less-profitable volume in North America and lower shipments to certain export markets for the overall decline, which was partially offset by higher shipments to customers in the United States.
Foodservice revenue grew 9.0% to $272.80 million as price/mix grew 8.0% thanks to the carryover effect of price increases in fiscal year 2017 and improvements in customer and product mix. Volume rose 1.0% due to broad-based growth across the segment's customer base.
Retail sales grew 6.0% to $102.00 million. Price/mix improved 4.0% thanks to higher prices across branded and private label portfolios. The improved mix was partially offset by higher marketing spending. Volume rose 2.0% due to distribution gains of ‘Grown in Idaho' products and growth of other branded products.
Looking ahead, the company expects that net sales will increase in the mid-single digits for the full year, which is an improvement from the company's previous guidance for low-to-mid single digit sales growth. The company expects that adjusted EBIDTA, including unconsolidated joint ventures, will be between $780 million and $790 million, up from a previous forecast for EBITDA between $740 million and $760 million.