July 23 (Reuters) - Lamb Weston LW.N forecast annual sales largely above expectations on Wednesday, betting on strong demand internationally from restaurants to which the company supplies its frozen potato products.
Shares of the company rose nearly 8% in premarket trading after it also posted a surprise rise in fourth-quarter revenue.
A 15% increase in the company's quarterly international segment sales, which contributed about 33% of its total sales in 2024, helped offset a decline in demand in the United States due to a fall in consumer spending.
Uncertainty stemming from U.S. President Donald Trump's fluctuating tariff policies and the resulting trade tensions have choked consumer spending in the U.S., prompting them to eat at home more and impacting sales at restaurants to which Lamb Weston supplies.
Its major clients, including McDonald's MCD.N and KFC parent Yum Brands YUM.N, saw a rebound in demand in the Middle East after last year's widespread informal boycott of Western fast-food chains for their perceived pro-Israel stance in the Gaza conflict.
Lamb Weston said its forecast assumes continued pressure on consumers, but expects them to rely on its french fries as they eat at home as well as at restaurants. It also said it did not include any additional impacts from changes in tariffs and trade policies.
It expects fiscal 2026 sales to be in the range of $6.35 billion to $6.55 billion, largely above analysts' average estimate of $6.42 billion, according to data compiled by LSEG.
The company aims to counter the slowdown in sales in North America through sequential price cuts on its products. Its prices were down 4% while sales volumes were up 8% for the quarter ended May 25, compared to a year ago.
Sales rose 4% to $1.68 billion in the reported quarter, versus analyst expectations of a fall of 1.4%, to $1.59 billion. Lamb Weston reported adjusted earnings per share of 87 cents, compared with analysts' estimate of 63 cents per share.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Pooja Desai)
((Neil.JKanatt@thomsonreuters.com;))
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