In a bid to enhance its global capabilities, Lamb Weston Holdings, Inc.LW acquired Marvel Packers Pty Ltd (Marvel) - a frozen potato processor in Australia. This operator of frozen potato processing and storage facilities in Hallam, Victoria improves Lamb Weston's global production capacity by about 50 million pounds.
Taking into account this latest buyout, Lamb Weston will own and operate 16 processing facilities internationally, and an additional nine facilities in collaboration with its joint venture partners. This acquisition not only opens up new avenues but also provides an opportunity to tap Australia's 1.1-billion-pound market.
Lamb Weston's focus on its strategic growth initiatives via constant investments in enhancing capacity, improvement of customer services, innovations and increased limited time offerings is an added positive. It also expects continued robust demand for frozen potato products and a tight production capacity in the current fiscal year.
Although management anticipates to face hurdles like a poor potato crop at its European joint venture, Lamb Weston/Meijer, it expects to offset these challenges with solid pricing and cost-saving initiatives as well as opportunities in its North American and export ventures. All said, the company is well positioned to achieve its fiscal 2019 goals. Backed by strong price/mix in the first half of the fiscal, management expects net sales to increase mid-single digits.
Furthermore, Lamb Weston's top line has been gaining from robust price/mix. This is quite evident from the fact that this drove sales across all segments in the first quarter of fiscal 2019. Notably, Lamb Weston's sales grew on the back of an 8% rise in price/mix.
In the past three months, shares of this Zacks Rank #2 (Buy) company have gained roughly 10% against its industry 's 13.7% decline.
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