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Lamb Weston Beats on Earnings but Slides on Rough Guidance

Lamb Weston tumbles on concerns about a volatile supply chain and inflation.

Lamb Weston  (LW) - Get Lamb Weston Holdings, Inc. Report tumbled Tuesday after the frozen potato products supplier swung to a fourth-quarter profit but warned that earnings in the first-half of the current fiscal year would be pressured by inflation and supply chain volatility. 

Shares of the Eagle, Idaho-based company tumbled 10.7% to $67.97 on Tuesday.

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Lamb Weston reported net income of $65.5 million, or 44 cents a share, compared with a loss of $1.6 million, or 1 cent a share, a year ago. Sales totaled $1.1 billion, up 19% from a year ago.

Analysts surveyed by FactSet were expecting earnings of 44 cents a share on revenue of $924.4 million.

Net sales for the retail segment, which includes sales of branded and private label products to grocery, mass merchant and club customers in North America, declined 28% from a year ago to $146.3 million.

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"Fiscal 2021 was the most challenging operating environment in our company’s history, but we believe the worst of the COVID-19 pandemic’s effect on our business is behind us," Tom Werner, president and CEO, said in a statement.

Looking ahead, Lamb Weston said it expects net income and adjusted EBITDA, including unconsolidated joint ventures, to be pressured during the first half of fiscal 2022. 

The company said it expects "volatility in the broader supply chain as the overall economy continues to recover from the pandemic’s impact, and anticipates significant inflation for key production inputs, packaging and transportation compared to fiscal 2021 levels." 

Lamb Weston also said operating expenses will increase in near term due to continued investments in manufacturing, supply chain, and commercial operations.

The company anticipates that earnings will gradually normalize in the second half of fiscal 2022 as manufacturing and distribution operations stabilize, and as price-mix improves.

Separately, Tesla  (TSLA) - Get Tesla Inc Report CEO Elon Musk warned investors that "for the rest of this year, our growth rates will be determined by the slowest part in our supply chain."