Lamb Weston beat expectations in the first quarter and raised its full-year outlook. North American sales volume increased 7%, while revenue and earnings declined in Europe. The stock surged 12% in premarket trading.
Lamb Weston announced that first-quarter net sales and earnings exceeded market expectations and that it had raised its full-year outlook. The company's stock surged approximately 12% before the market opened. North American sales volume increased 7%, marking the seventh consecutive quarter of growth, driven by higher orders from existing customers and the acquisition of new customers.
Segment-adjusted EBITDA increased 11% to $287 million, aided by cost savings and the impact of a $5 million tariff refund. In Europe, meanwhile, revenue decreased 8% and segment-adjusted EBITDA fell 54% to $27 million. The company attributed the declines to high-cost potato inventory and lower utilization.
Price/mix declined 2% in both segments. The company also cited inflationary pressure on key input costs and transportation expenses, while North American utilization improved by approximately 10 percentage points and the cost-savings program was expected to deliver results "ahead of expectations."
Although the full-year outlook was raised, earnings are still expected to remain below 2024 levels. The new forecast range is expected to exceed analyst estimates for fiscal 2027, and some observers believe the stock remains undervalued relative to historical levels.