Nothing egg-citing for Post Holdings earnings in Q3
Post Holdings reported a nominal increase of 2.1% ($26m) increase in net sales to $1.27bn, thanks to two new licensed products Oreo O’s and Honey Maid S'mores, and the growth of Malt-O-Meal (MOM) branded bags, Pebbles and PowerBar nutrition bars.
Adjusted EBITA was just over $244m.
However, the company made a Q3 net loss of $62.9m, compared to breakeven the year prior.
The St. Louis-based food maker said it had to absorb a 7.5% ($33.2m) decrease in operating profits to $404.2m in the nine months ended June 30, 2017.
The company was impacted by additional expenses of $160.4mover the period– including $74.5m and $10m for legal settlements related to egg antitrust class action claims, and $33.5m to finalise the Weetabix acquisition on July 3 – as well as $45.2m for interest rate and currency adjustments.
Pro forma egg sales declined 2.0% as a result of avian influenza (AI).
The increase in Post’s Q3 sales came on the back of growth from its Active Nutrition business segment, which saw a 21% increase in net sales of approximately $189m compared to the prior year.
“Michael Foods Group adjusted EBITDA was approximately $83m ($26m below the comparable prior year period) but improved sequentially as we continue to progress through the egg market recovery from AI,” said Zadoks
According to Robert Vitale, CEO and president of Post, while some customers have yet to return to value-added egg products, momentum for new opportunities is growing.
Post Consumer Brands (RTE cereals) and Private Label (nut butters, dried fruit and nuts, and granola) units also saw sales declines.
The cereal division felt a loss of 1.7% ($7.2m), while private label saw a 4.3% ($5.9m) loss in Q3.
Vitale said the company is excited about adding Weetabix to its portfolio and will work hard to deliver results in a challenging category.
“Cereal category trends [globally] weakened this quarter with a decline of 4.8% in dollars and 3.9% in pounds. We continue to see declines most pronounced in adult brands, all family brands performing with the category and kid's brands performing ahead of the category,” he said.
Private Label’s earnings were impacted by an oven fire in Q3, but Vitale said the company “anticipates the new capacity to come online in September”.
Over the first nine months of Post’s financial year, the company ran up net earnings of $23.9m, versus $12m last year.
Adjusted EBITDA was $702.7m for the period, a decrease of 1.6% ($11.7m) compared to the year prior.
The company still expects capital expenditure for the 2017 fiscal year to be up about $20m from previous guidance to $200-$220m, which includes $30-$35m for converting its hen housing to cage-free at its Bloomfield, Nebraska facility.