Post Holdings plans to close a US breakfast-cereal facility, putting around 200 workers’ jobs at risk.

Post Consumer Brands, the packaged foods division under the parent umbrella holding company, said in a statement today (1 December) the manufacturing site in Lancaster, Ohio, is earmarked for closure next September.

The decision to shut the plant, acquired in 2021 as part of Post Holdings’ purchase of US food peer TreeHouse Foodsprivate-label ready-to-eat cereal business, is linked to the need to reduce the company’s production capacity in the category.

Around 200 staff are employed at the factory, Post Holdings said, adding it has “engaged in discussions with the union representing employees at the Lancaster facility and has notified employees of the decision”.

Manufacturing carried out at the Lancaster site will be transferred to other facilities operated by Post Consumer Brands.

Nicolas Catoggio, the president and CEO of Post Consumer Brands, said: “We are continuously optimising our network so that we can best serve our customers and consumers. This facility closure enables Post Consumer Brands to continue offering a diversified portfolio of great products at a great value.”

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By GlobalData

The $85m deal for the TreeHouse Foods cereal business in 2021 also included a second production facility in Nevada, along with an R&D centre in Illinois.

Reporting its fourth-quarter results in November, Post Holdings said total product volumes for Post Consumer Brands in North America fell 6.2% due to declines in peanut butter and branded cereal. However, the drop was offset by an increase in private-label cereal volumes.

Post Consumer Brands’ sales revenue rose 71.5% for the quarter ended 30 September to $1bn, while Post Holdings’ revenue at the group level increased 23.2% to $1.95bn.

In connection with the Lancaster plant closure and transfer of operations, Post Holdings said it expects to take cash and non-cash pre-tax charges of $49-55m. However, the business anticipates annual savings of $23-25m from fiscal year 2025.

Post Holdings added the transfer will increase its capital expenditure budget for the 2024 financial year by around $20m, on top of the $400-425m already announced.

Outside of North America, Post Holdings also owns the Weetabix cereal and protein shakes brand in the UK. Fourth-quarter sales there rose 15.5% to $134.9m, with volumes up 2%.

Discussing the results in November, Post Holdings’ CEO Jeff Zadok, who is standing in while permanent boss Rob Vitale is on medical leave, outlined the challenges Weetabix is facing in the UK as a more premium-centred brand.

“If you track that market, cereal has become slightly greater than 50% private label,” Zadok said.

“What we need to do to get it back to closer to where we were pre-pandemic is we believe we need to simplify the business. We need to have a renewed focus on cost reduction and we need to continue investing in the brand so that we maintain the premium price points that enable us to generate the margins from that business.”