Operational and quality issues have prompted Post Holdings to close its Dymatize manufacturing facility in Farmers Branch, Texas.
Post said that the decision will impact around 115 employees. The group will transfer production of its sports nutrition powders to third party facilities under co-manufacturing agreements. Production of Dymatize products by third parties has already commenced and the closure is expected to be completed by the beginning of December.
"We have determined that the cost and effort to bring this facility to an acceptable reliability and margin level is better deployed in brand building and sales infrastructure," said Rob Vitale, Post's president and CEO. "This decision enables us to focus on rapidly changing consumer trends, developing innovative products and building upon the strong Dymatize brand."
The company will register a write-down of around US$9.2m in “unsaleable” inventory. Post will also incur pretax charges of $11-16m. These charges are expected to be incurred primarily in Post's fourth quarter of fiscal 2015. Approximately $2.5-3.5m will be incurred in fiscal 2016, the group added.
Post did, however, re-affirm its earnings outlook for fiscal 2015. The company said adjusted EBITDA is expected to call in a range of $635-650m.
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