US: Q4 sales boost fails to help FY profits at cereal firm Post
By Dean Best | 29 November 2012
- Higher volumes boost Q4 sales
- Grain costs hit FY adjusted EBITDA
An increase in fourth-quarter sales did not stop US cereal group Post Holdings reported a fall in underlying annual profits as costs ate into its bottom line.
Post booked a 4% increase in net sales for the three months to the end of September to $247.2m after volumes grew 4.9%.
However, higher grain costs and lower production volumes over the year meant Post reported annual adjusted EBITDA of $214.6m, compared to $248.9m a year earlier.
Over the year, net sales dropped 1% to $958.9m as volumes fell.
On a reported basis, Post booked annual net earnings of $49.9m, compared to a loss of $424.3m a year ago. Impairment charges after former parent Ralcorp Holdings analysed Post before spinning it off earlier this year hit the branded cereal firm's bottom line last year.
|POST HOLDINGS, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FISCAL YEAR 2012|
ST. LOUIS, Nov. 28, 2012 /PRNewswire/ -- Post Holdings, Inc. (NYSE:POST), a leading manufacturer, marketer and distributor of branded ready to eat cereals, today reported results for the quarter and full fiscal year ended September 30, 2012.
Ready to eat cereal category revenues were down slightly, -0.7%, for the thirteen weeks ended September 29, 2012 as compared to the prior year, and category volumes, measured in pounds, declined 2.1%, according to Nielsen. Category dollars for the quarter were not down as significantly as consumption volume due to slight increases in every day and promoted average selling prices. The current year Nielsen data referenced in this press release is as of September 29, 2012.
Post's U.S. xAOC dollar market share was 10.2% and 10.4% for the thirteen week and fifty-two week periods ended September 29, 2012, respectively, flat versus the year ago quarter and down 0.4 share points for the fifty-two week period versus the same prior year time period. Post's xAOC pounds share increased 0.5 share points to 10.3% for the thirteen week period ended September 29, 2012, driven primarily by higher promotion and an increased distribution in value channels which have a lower price per pound.
Post net sales increased 4.0% for the quarter ended September 30, 2012 as compared to the prior year, primarily driven by 4.9% higher volumes, led by Honey Bunches of Oats, Great Grains and Pebbles, partially offset by lower overall net pricing from greater consumer promotion and increased value distribution. For the fourth quarter versus the comparable prior year quarter, Honey Bunches of Oats and Pebbles volumes increased 9.9% and 9.5%, respectively, while Great Grains and Grape Nuts volumes grew 13.5% and 2.8%, respectively. For the year ended September 30, 2012, net sales decreased 1.0% versus a year ago. This decline was principally driven by 3.2% lower volumes only partially offset by higher gross and net pricing. For the fiscal year, Honey Bunches of Oats and Pebbles volumes were down 2.3% and 6.4%, respectively, versus prior year, however, Great Grains experienced a year over year volume increase of 10.1%.
Gross profit margin increased by approximately 130 basis points for the fourth quarter versus prior year, largely driven by favorable manufacturing costs due to improved fixed cost absorption from higher volumes and cost efficiencies, partially offset by unfavorable commodity costs (primarily grains) and lower net pricing. For the full year, gross profit margin decreased by approximately 190 basis points versus the same time period a year ago driven by higher raw materials cost (primarily grains) and unfavorable fixed cost absorption resulting from lower production volumes.
Excluding the effect of $2.1 million and $2.8 million of costs related to the transition and separation fromRalcorp incurred during the fourth quarter of fiscal 2012 and 2011, respectively, selling, general and administrative expenses as a percentage of net sales increased from 23.7% in the fourth quarter of fiscal 2011 to 28.2%. This increase was primarily driven by incremental holding company costs, higher operating company overhead for the new direct sales force, bonus costs and slightly higher advertising and consumer costs. Excluding the effect of $12.5 million and $2.8 million of costs related to the transition and separation from Ralcorp incurred in fiscal 2012 and 2011, respectively, selling, general, and administrative expenses as a percentage of net sales increased from 24.4% in fiscal 2011 to 27.3% in fiscal 2012. The increase was primarily driven by incremental holding company costs, and higher operating company overhead for the new direct sales force and bonus costs partially offset by lower warehousing and broker expense.
Adjusted EBITDA for the quarter was $53.5 million versus $56.7 million for the same time period a year ago and declined sequentially from $61.4 million. For the full year, Adjusted EBITDA was $214.6 million versus$248.9 million for the same period a year ago.
Income tax expense was $6.2 million, which represents an effective income tax rate of 36.5%, for the fourth quarter, compared to a tax benefit of $32.5 million and an effective income tax rate of 6.3% for the same period a year ago. For the full year, income tax expense was $30.5 million, an effective income tax rate of 37.9%, compared to a benefit of $6.3 million and an effective income tax rate of 1.5%, for the year endedSeptember 30, 2011. The current quarter and current year effective tax rates were both unfavorably impacted by tax expense related to an uncertain tax position we expect to take on our short period tax return for the period starting with the separation from Ralcorp Holdings, Inc. and ending on September 30, 2012. The year to date effective income tax rate was also unfavorably impacted by $4.6 million of non-deductible outside service expenses incurred to effect the Company's separation from Ralcorp, which resulted in incremental income tax expense of approximately $1.8 million. The prior year quarterly and annual effective tax rates were significantly impacted by the nondeductible goodwill impairment expense incurred during the fourth quarter of fiscal 2011. Management anticipates that the effective income tax rate will return to its historical range of 32% - 35% in fiscal 2013.
Net earnings were $10.8 million, or $0.31 per diluted share, for the fourth quarter. For the full year, net earnings were $49.9 million, or $1.45 per diluted share. Adjusted net earnings and Adjusted diluted earnings per share for the quarter were $11.9 million and $0.35, respectively. For the full year, Adjusted net earnings and Adjusted diluted earnings per share were $52.7 million and $1.53, respectively. Management has provided these non-GAAP measures because they are representative of Post as a stand-alone public company and not an operating segment of Ralcorp.
On September 28, 2012, Post repurchased with cash 1.75 million shares of its common stock, or approximately 5% of its shares outstanding, at $30.50 per share, or approximately $53.4 million in aggregate. These shares were a portion of the Post shares that were retained by Ralcorp in connection with the spin-off of Post.
Original source: Post Holdings
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US: Q4 sales boost fails to help FY profits at cereal firm Post
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