This was caused by $74.5m in legal settlements to resolve egg antitrust class action claims,reported in BakeryandSnacks in December.
However, the consumer packaged goods company’s revenue was up 0.1% year-on-year to $1.25bn.
Net earnings also increased, up 282.7% to $97.5m, while adjusted EBITDA decreased by 2.3% to $230.1m, compared to 2016.
According to Jeff A. Zadocks, senior VP and CFO of Post, EBITDA was influenced by two major factors during Q1.
“The first big driver was the $75m in legal fees and the other big driver was Q1 was our bonus payment period, which were at max levels.
“These are not going to repeat every quarter, so if you factor these out, you will see more normal levels,” he said.
Net sales also declined 2.2% in contrast to the same period in 2016 because of a drop in sales within the Michael Foods Group segment, which encompasses the Group’s egg, potato, cheese and pasta businesses.
Net sales for the division were just under $540m for Q1, a decline of 7.9% over Q1 2016.
Zadocks said the biggest factor was the plunge in egg sales (12.8% compared to 2016) as a result of the reduced egg supply because of the impact of avian influenza (AI).
In December 2016, the Department for the Environment, Food and Rural Affairs (Defra) reported an outbreak of the H5N8 strain of bird flu at a turkey farm in Louth, Lincolnshire.
“AI has created short term volatility but we are positive about our egg business going forward,” said Robert V. Vitale, president and CEO, Post Holdings.
Post Consumer Brands, which includes the ready-to-eat (RTE) cereal business, reported an increase of 2.2% (to $420.6m) in net sales for the first quarter.
According to the company, which is headquartered in St. Louis, Missouri, the division benefitted from a growth in sales of Malt-O-Meal branded bags, Pebbles and Honey Bunches of Oats.
Zadocks also said the sales in Great Grains were impacted as some of the branded products were discontinued last year.
He reported the segment’s Q1 2017 profit was $81.6m, compared to $62.9m for the same period in 2016, while adjusted EBITDA was up by $11.7m to $108.9m.
Private Brands’ net sales were comparatively flat compared to the prior year first quarter, at $135.6m.
While the segment benefitted from growth in volume for granola and organic peanut butter, this was offset by lower net pricing for almond and walnut products and volume declines for regular peanut butter, and fruits and nuts.
“Granola showed marginal growth, but our nut butter, and fruit and nut businesses were disappointing and we will move to address these,” commented Vitale.
The company’s Active Nutrition division, which includes protein shakes, bars and powders and nutritional supplements, experienced an increase of 32.9% from the prior year first quarter to $153.9m in net sales.
In light of the drivers that affected EBITA in Q1, Post’s management said its fiscal 2017 adjusted EBITDA range will be between $920-$950m, with modest favorability to the second half of fiscal 2017.
Capital expenditure is expected to be between $180m-$200m, of which $25m-$35m will be spent on the cage-free housing conversion at the company’s Bloomfield, Nebraska facility.
Up in ratings
Two investment analysts have rated the company’s stock with a hold rating and six have assigned it a buy rating.
For example, last month, TheStreet raised the company from a “c” to a “b-” rating; while Zacks Investment Research raised it from a hold rating to a buy rating and set a $94.00 price.