US-based French fries manufacturer Lamb Weston has announced the appointment of a new CEO, just days after being urged to shake up its leadership team by an activist investor.
The listed business, based in Idaho, has appointed current COO Michael Smith as its CEO and president, effective 3 January. He replaces Thomas Werner, who is stepping down as CEO and as a member of the board, although he will remain with the business in an advisory capacity until next August.
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On Monday (16 December), activist investor Jana Partners, which took a
5% interest in Lamb Weston in October for $336m, and has been critical of the company’s performance, said it had received no response from management to its call urging the business to launch a “review of strategic alternatives”.
It said in its letter on Monday that it hoped the company’s executive team would take the opportunity at today’s announcement of its second-quarter results to “address our previously expressed view that significant board and leadership change is needed at Lamb Weston and that in its absence the company should pursue a formal review of strategic alternatives, including a sale”.
Lamb Weston’s US food peer Post Holdings is reportedly interested in acquiring the frozen potato products supplier.
In today’s announcement of a CEO change, Lamb Weston described Smith, who joined the company in 2007 and has served in senior leadership roles during his career there, as “a key leader, driving strong growth across multiple areas of the company”.
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By GlobalDataCompany chairman W.G. Jurgensen suggested his appointment has been planned for some time.
He said: “Mike’s appointment represents the culmination of a thoughtful, years-long succession planning process by our board, and we are confident he is the right leader to guide Lamb Weston forward.
“Mike has developed a deep understanding of all critical aspects of our business and commercial operations. He will also bring a fresh perspective to the role, along with a blend of strategic thinking and a laser focus on capturing current market and operational opportunities, as well as a deep appreciation for our employees, customers and partners.”
Smith said: “I am excited about the opportunities ahead for our company and believe that our unwavering focus on customer satisfaction, operational excellence and continued innovation will enable us to enhance value for our shareholders.”
Meanwhile, the company has cut its annual net sales outlook from the previous $6.6bn to $6.8bn range, to $6.35bn to $6.45bn. The move is to “primarily reflect the increased competitive environment on price/mix and volume in its international segment, incremental volume pressure in North America, and its financial performance in the second quarter”.
At the same time, the guidance for EBITDA, EPS and net income was also paired.
Adjusted EBITDA is now seen in a $1.17-$1.21bn range, down from around $1.38bn previously. Net income is envisaged at $330-350m, compared to the prior forecast of $395-445m.
Diluted EPS is expected at $2.30 to $2.45, a cut from $2.70 to $3.15.
Its Q2 financial results, released today, showed net sales of $1.60bn, down 8% year-on-year, while adjusted EBITDA was down 25% at $281.9m.
Lamb Weston also lowered its net income and EPS targets at the first-quarter results stage in October, as the frozen potato products supplier also announced the closure of its Connell, Washington, facility and a raft of job cuts as part of a cost-savings exercise.
