By Kelly Cloonan

Lamb Weston executives warned that its profit would face pressure both from continued discounting to win back business and rising manufacturing costs internationally.

The french-fry maker on Friday reaffirmed its sales guidance for the year, due in part to strong sales in the first half of its fiscal year as it enacts a turnaround.

Pricing dynamics with customers, costs to ramp up manufacturing in Argentina and underutilized production in Europe means the company's earnings before interest, taxes, depreciation and amortization will come in around the midpoint of its range for between $1 billion and $1.2 billion, Chief Financial Officer Bernadette Madarieta said on call with analysts Friday.

Analysts polled by Factset were looking for Ebitda of $1.17 billion, closer to the top end of the range.

Shares of Lamb Weston slid 20% to $47.43, even as the second-quarter results topped expectations, putting the stock on track for its lowest close since 2020. Shares are down 29% year to date.

Lamb Weston has made some progress in its turnaround, which came after a series of soft results in recent quarters. A key issue had been a drop in restaurant visits, and, hence, fewer french fry purchases.

In its latest quarter, Lamb Weston posted a slight increase in sales, with the North American market basically flat, while international sales rose 4%. Its sales volume rose 8%, which was offset by lower prices as it worked to retain customers and gain new ones, particularly in North America and Asia.

The results prompted the company to reopen some previously curtailed capacity in North America to keep up with demand.

The European market continues to pose challenges. A strong potato crop there has coincided with softer restaurant traffic and lower export demand, dragging on prices. The company is curtailing a production line in the region as a result in an effort to balance supply and demand.

For the quarter ended Nov. 23, Lamb Weston swung to profit of $62.1 million, or 44 cents a share, compared with a loss of $36.1 million, or 25 cents a share, a year earlier. The company's cost savings and restructuring plan resulted in a pre-tax charge of $14.1 million in the recent quarter, compared to a charge of $159.1 million in the prior-year period.

Adjusted earnings per share were 69 cents, ahead of estimates of 64 cents a share according to analysts polled by FactSet.

Revenue ticked up 1.1% to $1.62 billion, topping analyst estimates of $1.59 billion.

The company said it remains on track to deliver its target of $100 million in cost savings this fiscal year, as part of its restructuring and cost-savings program. That plan is expected to deliver at least $250 million of annual run-rate savings by the end of fiscal 2028.

The company also raised its quarterly dividend by 3%, to 38 cents a share.

The new payout, equal to $1.52 a year, represents an annual yield of about 2.6% based on Thursday's closing price of $59.33.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

December 19, 2025 12:05 ET (17:05 GMT)

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