Post banks on solid sales from acquisitions to offset soft income of own brands in Q3
Post Holdings has certainly been benefiting from its focus on acquisitions.
In the second quarter of fiscal 2021, Post’s top line gained from its acquisition of Henningsen, Peter Pan and Almark Foods, which is renowned for its hard-cooked and devilled egg products.
For the third quarter of fiscal 2021, the St. Louis-based company reported net sales of $1,58bn (up by $253.4m) compared with the year prior, including net sales of $78.5m from acquisitions.
Post also said it had finally completed the delayed deal for TreeHouse Foods’ ready-to-eat (RTE) cereal business during its third quarter. The deal was initially announced in 2019, however, the Federal Trade Commission (FTC) filed a complaint opposing it. According to the FTC, as two of the only three significant manufacturers of private label RTE cereals in the US, the acquisition would give Post more than 60% market share.
Despite the delay, the two companies remained committed to the deal and eventually finalised it in June 2021 for $85m. For the quarter, Post-branded cereals demonstrated a 12.5% market share, driven by the Pebbles brand.
Pandemic sales rollercoaster
Post said net sales from its acquisitions netted $38.4m for the quarter, but net sales still decreased 11.2% overall (-$59.4m) versus a year earlier, largely due to the mad rush by consumers to stock up when the pandemic hit. The company is now seeing a continuing softness across value and private label cereal products, but expects this to normalise.
“We further expect that cost reduction enabled by our recent acquisition of to two cereal plants from TreeHouse will provide us further differentiation opportunities in the value segment,” said Robert Vitale, president and CEO of Post Holdings.
For the quarter ended 30 June 2021, Post reported gross profit of $479.4m, or 30.2% of net sales, an increase of 9.8%, or $42.6m, compared with a year ago.
Net loss was $7.1m, a decrease of 282.1% (-$11m), while adjusted EBITDA was $16.3m, a decrease of 36.3% (-$9.3), versus a year ago.
For the nine months ended 30 June 2021, net sales were $664.5m, down 4.4% (-$30.7m), compared to the prior year period. Net loss was $8.2m, a decrease of 95.2% (-$4m).