Frozen food supplier Lamb Weston provides dour annual forecasts on weak demand

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(Reuters) - Lamb Weston (LW) forecast its annual sales and profit below analysts' expectations on Wednesday, as higher prices of its frozen food products begin to hurt volumes, sending its shares plunging more than 20% in early trading.

The company has been increasing prices of its products, including ready-to-cook classic and sweet potato fries to offset rising costs of manufacturing, transportation and inputs such as potatoes.

Lamb Weston, which supplies to fast-food chains such as McDonald's and KFC-owner Yum Brands, also faced pressure from more people opting to cook their meals at home amid persistent inflation.

"Market share losses and a slowdown in restaurant traffic in the U.S. and many of our key international markets were greater than we expected. We also incurred losses related to a voluntary product withdrawal," CEO Tom Werner said.

The company forecast 2025 net sales in the range of $6.6 billion to $6.8 billion, the mid-point of which was below LSEG estimates of $6.79 billion.

It also expects full-year earnings per share to be between $4.35 and $4.85, compared with analysts' average estimate of $6.09.

The company said its volumes in the first half of the fiscal 2025 was likely to decline low-to-mid single-digits range.

Its volumes fell 8% in the fourth quarter.

Revenue of $1.61 billion in the quarter ended May 26 was below analysts' estimate of $1.70 billion.

The company's adjusted earnings per share was at 78 cents compared with the $1.26 estimated.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shilpi Majumdar)

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