Lamb Weston, a U.S. supplier of potato products, is closing one of its manufacturing plants in Argentina while also reducing production in the Netherlands. The company has announced that it will shut down its Munro facility, which will impact 100 employees who will be offered severance packages. Manufacturing will be consolidated at the newly opened site in Mar del Plata, emphasizing the importance of streamlining operations.
“This decision is part of our broader strategy to improve profitability and enhance operational efficiency across our global manufacturing network,” said Sylvia Wilks, Chief Supply Chain Officer. Effective cost management throughout the supply chain is critical for delivering value to customers and prioritizing investments in modernizing assets.
Following the closure of the Munro site, Mar del Plata will become Lamb Weston’s sole manufacturing location in Latin America. The site produces a diverse range of potato products, although no date has been set for the closure due to ongoing legal negotiations with workers. Until these negotiations conclude, the facility will remain open without production.
Lamb Weston’s President and CEO, Mike Smith, who was promoted from COO in January, previously announced a $200 million annual cost-savings program in July. This plan goes hand-in-hand with the ‘Focus to Win’ strategy, which he highlighted at that time. This strategy focuses on zero-based budgeting, evaluating non-core assets, and enhancing commercial go-to-market approaches.
Furthermore, the Munro site closure aligns with the company’s broader strategy to prioritize specific markets and strengthen customer partnerships, which is crucial given the pressure from shareholders such as Jana Partners and Continental Grain Co. to revitalize the company. These changes were publicly detailed alongside the company’s full-year results, which saw net income fall by 51% to $357.2 million, while adjusted EBITDA decreased by 14% to $1.22 billion. Net sales remained flat at $6.45 billion.
In the current financial year, net sales remained stable, with a slight increase in net income, while adjusted EBITDA saw a slight decline. Reports for the half-year ending November 23 showed Lamb Weston generating $3.27 billion in sales, compared to $3.26 billion the previous year. Net income improved by 38% to $126.4 million, but adjusted EBITDA fell by 1% to $587.8 million. The company maintains its full-year outlook, targeting sales in the range of $6.35 billion to $6.55 billion, with adjusted EBITDA expected between $1 billion and $1.2 billion.
Additionally, alongside the Munro site closure, Lamb Weston plans to “temporarily curtail a line in the Netherlands” as part of the Focus to Win strategy. This move aims to balance short-term demand with the company’s long-term strategic objectives. The spokesperson did not disclose further details about the plant, its location, or the duration of the production suspension.
In total, Lamb Weston operates five sites in the Netherlands, showcasing its significant footprint in the food and beverage industry.
