Ralcorp set to fork out $22m on consolidation

By Kacey Culliney

- Last updated on GMT

Related tags: Management, Ralcorp

Costly consolidation should benefit business in future, says Ralcorp
Costly consolidation should benefit business in future, says Ralcorp
Diversified private-brand specialist Ralcorp Holdings has announced it will consolidate its cereal, pasta, snacks and sauces businesses at a price of $17m-$22m in a bid to improve efficiency, slash costs and drive business forward.

The strategic restructuring announcement came as the US company posted its 11% net sales surge in its preliminary Q3 earnings, officially out August 8.

The ‘accelerated cost reduction program’ was initiated on July 31 to “improve organisational effectiveness and reduce costs”​, Ralcorp said.

The overall aim will be to ensure pre-tax savings of between $26m-$31m for fiscal 2013, it said.

However, the move will come at a hefty cost of $17m-$22m as a result of employee separation and related expenses, Ralcorp acknowledged.

Total restructuring of business is set to be completed in the fiscal year of 2014.

Pooling power

Ralcorp is comprised of cereal firm Ralston Foods, snacks businesses Bremner Food Group, spreads and sauces firm Carriage House Companies, its own Frozen Bakery Products and the American Italian Pasta Company.

It will consolidate all businesses into a single-centre private-brand food company, with plans to possess leading positions across 20 food categories.

The move will create a business with superior scale and capability in sales, marketing, research and development and operations, Ralcorp said.

Kevin J. Hunt, president and CEO of Ralcorp, backed the business realignment.

“We believe the actions we are taking… will result in a leaner, more cost efficient operation that is more appropriately structured for sustainable, long-term growth,”​ Hunt said.

Full details of the restructuring implications will be discussed in its Q3 results.

Related topics: Manufacturers

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