Post Holdings sees 2015 sales lift as US RTE cereal declines slow

By Douglas Yu

- Last updated on GMT

'The cereal category has continued to show improvements in its rate of decline,' says Post CEO. Photo: iStock - raspberryhmac
'The cereal category has continued to show improvements in its rate of decline,' says Post CEO. Photo: iStock - raspberryhmac

Related tags: Wheat, Breakfast, Cereal

Post Holdings has reported strong sales growth in its full year and fourth quarter (Q4) results, driven by an improving ready-to-eat (RTE) US cereal category and its merger with MOM Brands.

The firm saw a 92.8% surge in full-year sales to $4.6bn, while fourth quarter and fiscal year net sales climbed 25.6% to $1.3bn.

RTE cereal uplift in US

Rob Vitale, Post president and CEO said: “The cereal category has continued to show improvements in its rate of decline."

IRI Worldwide reports that the sales value of Post Honey Bunches of Oats, one of the company's RTE cereal products, have increased by 4.67% year-to-date compared to last year.

“While we would certainly like to be discussing category growth, the first step in getting there is slower decline. We attribute this improvement to an overall increase in cereal advertising, a modestly improving consumer profile, and simply the lapping of weaker comparisons,”​ Vitale said.

Post sealed a $1.15bn merger with America’s third largest breakfast cereal maker MOM brands in May this year.

“Combined our share of the RTE cereal market is now 18% and 20.7% in dollars and volume respectively,” ​said Vitale.

Net sales in Post’s consumer brands segment - which includes Mom Brands and Post products such as Raisin Bran and Golden Crisp - were up $297.7m for the full fiscal year.

But Post did report distribution declines for some of its own brands, primarily for Honey Bunches of Oats.

However, its private label division enjoyed a 14.9% sales uplift for granola and cereal products for the full year.

Dymatize remains a challenge

Post experienced some setbacks in its active nutrition segment that includes the protein shakes, bars and powders and nutritional supplement products of the PowerBar, Premier Protein and Dymatize brands.

Even though most products in this segment grow continuously, as the fourth quarter net sales grew by 0.7% or $1.0m, “our challenge remains Dymatize”​, said Jeff A. Zadoks, senior vice president and chief financial officer. Dymatize negatively impacted the fourth quarter results due to the closure of a Dymatize manufacture facility in Farmers Branch, Texas.

Zadoks said that the plans to remedy Dymatize include proceeding with internal manufacturing, shrinking the brand’s private label business to focus on core products, contemporizing the packaging and innovation.

Post Holdings anticipates a fiscal 2016 adjusted EBITDA of between $780m and $820m for its entire business.

Related topics: Cereal & Cereal Bars, Manufacturers

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