Higher raw material costs and lower sales hit Posts first-quarter earnings

Higher raw material costs and lower sales hit Post's first-quarter earnings

US cereal maker Post Holdings has reported a fall in profits in its first quarterly report since its spin off from private-label manufacturer Ralcorp Holdings.

Higher raw material costs and lower sales hit Post's first-quarter earnings, the Grape Nuts owner said yesterday (8 March).

Net earnings reached US$12.8m in the three months to the end of December, down from $23.4m a year earlier. Operating profit fell 36.1% to $31.3m.

Gross margins fell 360 basis points due to higher raw material costs and "unfavourable fixed cost absorption" due to lower production volumes.

Sales slid 2% to $219.3m due to a 3% fall in volumes. Citing data from Nielsen, Post said its share of the US ready-to-eat cereal category was 11.1% in the 13 weeks to 31 December, against 11.5% a year earlier. However, Post said its share increased versus the 13 weeks to 1 October, when it was 10.3%.

The US ready-to-eat cereal sector has seen sales come under pressure in recent months. Data from Nielsen showed industry revenues were up 1% in 13 weeks to 31 December, although volumes fell 6%.