US: Post Holdings lowers EBITDA guidance for 2014
Post Holdings warns of lower profits for 2014
US food group Post Holdings has lowered its forecast for annual adjusted EBITDA.
The company pointed to costs linked to M&A, a lag in volumes at pasta arm Dakota Pasta Growers and pressure on US breakfast cereal sales.
The firm announced today that fiscal 2014 adjusted EBITDA would be expected to sit between $300-$320m compared with its February forecast of $315m-$340m.
"The updated adjusted EBITDA guidance reflects adjustments for continued holding company costs supporting M&A activity, delays in new business volume at Dakota and softness in the ready-to-eat (RTE) cereal category in Post's second fiscal quarter" the firm said in a statement.
On Dakota, management advised it expected to "return to historical volume levels in 2015" thanks to a "strong pipeline". On cereal, management said it believed the category would "return to a single-digit growth rate in 2015".
Post's fiscal year runs to the end of September. In the 12 months to the end of September last year, it generated adjusted EBITDA of $216.7m.
The company, which cuts its forecast after the markets closed in New York yesterday, saw its shares plunge today (11 March) by 8.62% to $54.99 per share at 12:19 ET.
ST. LOUIS, March 10, 2014 /PRNewswire/ -- Post Holdings, Inc. (NYSE:POST) (the "Company") today updated its previously issued Adjusted EBITDA guidance for fiscal 2014. This release should be read in conjunction with the financial statements and management's discussion and analysis included in the Company's filings with the Securities and Exchange Commission, as well as the matters discussed under "Risk Factors" in the Company's second Form 8-K filed today, March 10, 2014.
Including the partial year expected results of Dakota Growers Pasta Company, Inc. ("Dakota") (acquired on January 1, 2014), as well as Golden Boy Foods Ltd. and Dymatize Enterprises, LLC (both acquired onFebruary 1, 2014), and excluding the pending acquisition of the PowerBar and Musashi brands fromNestle S.A., Post management now expects fiscal 2014 Adjusted EBITDA to be between $300 and $320 million.
The updated Adjusted EBITDA guidance reflects adjustments for continued holding company costs supporting M&A activity, delays in new business volume at Dakota and softness in the ready-to-eat (RTE) cereal category in Post's second fiscal quarter.
Further Discussion of Updated Guidance
Post management expects continued elevated holding company costs supporting M&A activity, primarily consisting of increased audit fees for pending or completed acquisitions, due diligence fees on abandoned acquisitions, outside service fees related to IT integrations, and increased headcount to support a larger footprint. Management will continue to prioritize investment in integration and additional M&A over near-term profit targets.
Additionally, as expected, in late 2013 and early 2014, certain customers of Dakota in-sourced ingredient purchases. The replacement of volume is developing more slowly than expected. Management believes Dakota has a strong pipeline of business development opportunities. Some are under contract and some in the late stage of discussions. Management expects to return to historical volume levels in 2015.
Finally, Post management has seen on-going softness in the RTE cereal category in Post's second fiscal quarter resulting in a revision to the outlook for the Post Foods business for fiscal 2014. Management believes the RTE cereal category will return to a single digit growth rate in 2015.
Original source: Post Holdings
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