Lamb Weston Holdings has unveiled new plans aimed at achieving cost savings, which will inevitably impact jobs within the potato-products sector.
This U.S.-listed company has been under increasing investor scrutiny recently and is now targeting “at least” $250 million in savings.
According to President and CEO Mike Smith, the company aims to secure “$200 million in annualized run-rate savings and $120 million of favorable working capital improvements” by the conclusion of its fiscal year in 2027.
He remarked, “We expect that these cost savings and working capital enhancements, coupled with lower capital expenditures, will boost our profitability and cash flow.”
Last month, Lamb Weston responded to pressure from shareholders Jana Partners and Continental Grain Co. by agreeing to revamp its board of directors.
Jana Partners has been advocating for changes since acquiring a minority stake in the company last October, citing “self-inflicted missteps” regarding Lamb Weston’s operational performance.
In October of last year, the company had already revised its profit targets following a restructuring plan that involved closing a U.S. factory permanently and cutting jobs.
The newly announced savings plan incorporates “headcount reductions” representing approximately 4% of Lamb Weston’s global workforce, as stated on July 23.
The company did not specify exact figures but mentioned that the cuts also included the elimination of unfilled positions.
Smith further explained, “We enter fiscal 2026 with greater discipline regarding our customer relationships and cost structure. We have a clear and executable plan to excel with our customers and thrive in a dynamic marketplace. Our Focus to Win strategy prioritizes markets and channels where we are well-positioned for long-term success, leveraging our unique strengths.”
This plan was revealed alongside Lamb Weston’s annual financial results, which showed a substantial 51% drop in net income to $357.2 million for the year ending May 25. Adjusted net income also fell by 35%, totaling $478.6 million.
Net sales remained steady at $6.45 billion after a 4% increase in the final quarter. However, fourth-quarter net income saw a decline of 7%, although it rose 8% on an adjusted basis.
Smith concluded, “Lamb Weston returned to growth in the second half of the year, achieving momentum in customer wins and retention, resulting in financial results that surpassed our updated expectations.”
Bernstein analyst Alexia Howard characterized the company’s fourth-quarter performance as “very solid,” highlighting “strong volumes and effective cost containment.”
