Lamb Weston sets out savings quest
The US-listed business, which has faced investor pressure in recent months, is looking to make "at least" $250m in savings.
President and CEO Mike Smith said the company was targeting '$200m in annualised run-rate savings and $120m of favourable working capital improvements' by the end of its 2027 fiscal year.
'We expect that these cost savings and working capital improvements together with lower levels of capital expenditures will help drive improved profitability and cash flow,' he said.
Last month, Lamb Weston bowed to pressure from shareholders Jana Partners and Continental Grain Co. to revamp its board of directors.
Jana Partners had been calling for changes to Lamb Weston's board since it took a minority stake in the company last October and had criticised the business for what it called 'self-inflicted mis-steps' in terms of its performance.
Earlier in October last year, Lamb Weston had slashed its profit targets in light of a restructuring plan that includes the permanent closure of a US factory and job cuts.
The fresh savings plan includes 'headcount reductions' that amount to around 4% of Lamb Weston's global workforce, the company said yesterday (23 July).
The company did not disclose specific numbers but said the cuts 'also reflect the elimination of certain unfilled positions'.
Smith added: 'We enter fiscal 2026 with increased discipline around our customer relationships and our cost structure, along with a clear and executable plan of how to win with customers and succeed in a dynamic marketplace. Our Focus to Win plan prioritises markets and channels where we are well positioned to win for the long-term and doing what our team does better than anyone else.'
The plan was announced alongside Lamb Weston's annual financial results. Net income fell 51% to $357.2m in the year to 25 May. On an adjusted basis, net income dropped 35% to $478.6m.
Net sales were flat at $6.45bn after a 4% rise in the final quarter of the year. Fourth-quarter net income fell 7% but increased 8% on an adjusted basis.
Smith added: 'Lamb Weston returned to growth in the second half of the year with momentum in customer wins and retention, delivering financial results above our updated expectations.'
Bernstein analyst Alexia Howard described the company's fourth-quarter results as 'very solid' pointing to 'strong volumes and cost containment'.
"Lamb Weston sets out savings quest" was originally created and published by Just Food, a GlobalData owned brand.
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