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Lamb Weston is buying up the remaining share in its Argentina frozen potato products joint venture with Sociedad Comercial del Plata.
The US-headquartered French fries supplier and producer of frozen snacks and appetisers first entered the venture – Lamb Weston Alimentos Modernos – in 2019 with an equal 50% stake.
New York-listed Lamb Weston then increased its interest to 90% in 2022 and is now buying out the Argentinian holding company for an undisclosed sum.
Translated as Lamb Weston Modern Foods, the business produces the Rapipap brand of frozen potato products and also serves private-label clients. Operating out of the town of Munro in the Greater Buenos Aires region, it supplies the local market, along with Brazil, Uruguay, Paraguay and Bolivia.
There will be no changes to the company’s operational set-up or contracts in Argentina, and all employees will be retained.
Marc Schroeder, the president of Lamb Weston’s international business division, said: “This acquisition allows Lamb Weston to fully align its commercial strategy in Argentina and invest more in the local market.
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“We remain committed to providing high-quality products and services to our customers and partners, as well as ensuring the stability and growth of our company.”
The Munro facility in Argentina is the only plant Lamb Weston owns in Latin America, according to its 2023 annual report. However, a second is due to come on stream this year in Mar del Plata, also located in Buenos Aires. That project was announced in 2022 within the joint-venture partnership.
That same year, the US parent company bought out another joint venture over in Europe. It purchased the remaining 50% share of Lamb Weston-Meijer held by Dutch group Meijer Frozen Foods, an equally split project set up in 1994.
Closer to home, Lamb Weston has been suffering from a mismatch between supply and demand in North America.
As a result, it booked an inventory write-down charge earlier this year of $71m, which impacted Lamb Weston’s second-quarter profit in fiscal 2024.
Now in the new financial year, profit targets were then slashed earlier this month as the business announced a restructuring exercise amid “soft” demand.
Lamb Weston revealed an immediate plan to permanently close a manufacturing facility in Connell, Washington, with the loss of hundreds of jobs.
Concurrently, the business plans to eliminate about 4% of its global workforce, while “temporarily curtailing production lines and schedules in North America”.
President and CEO Tom Watson explained: “To drive operational and cost efficiencies, we are taking actions that include the permanent closure of an older, higher-cost processing facility and the temporary curtailment of certain production lines and schedules in our manufacturing network.
“Together, we expect these actions will help us better manage our factory utilisation rates and ease some of the current supply-demand imbalance in North America.”
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Publish date : 2024-10-09 04:06:00
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