US food major Post Holdings is to shut two of its cereal manufacturing facilities in North America, pointing to a “declining” market for ready-to-eat cereals.
In a filing with the US Securities and Exchange Commission (SEC) yesterday (9 April), Post Holdings said the closure of the facilities in Ontario and Nevada is part of its plans “to reduce capacity in its cereal production network”.
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The company said the facilities in Cobourg and Sparks employ approximately 300 people in total.
The facilities are part of Post Holdings’ Consumer Brands segment, which saw a 2.5% decline in net sales, totalling $963.9m, in the first quarter of fiscal year 2025.
The segment primarily comprises North American ready-to-eat cereal, pet food and peanut butter.
Post Consumer Brands president and CEO Nicolas Catoggio said: “The ready-to-eat cereal category continues to decline. To respond to this, we are reducing excess manufacturing capacity and optimising our North American plant network to better utilise our production capacity.”
Production at the affected facilities will be “transferred” to other Post Holdings locations, the US packaged food manufacturer said.
The closure process is expected to be completed by the end of December.
The Cobourg facility became part of Post Holdings’ portfolio in 2017 following its acquisition of UK cereal business Weetabix. The Sparks plant was integrated into the group in 2021 through the acquisition of Treehouse Foods’ ready-to-eat cereal division.
Post Holdings anticipates incurring pre-tax charges ranging from $63.5m to $67.5m in connection with the closures and the transfer of operations.
The company also expects to spend an additional $5m to $7m in capital expenditures to facilitate the transition, incremental to its previously announced fiscal year 2025 capex guidance range of $380m to $420m.
As a result of the closures, Post Holdings projects annual cost savings of approximately $21m to $23m, starting in fiscal year 2026.
In December, Post Holdings signed terms to acquire the refrigerated and frozen potato products manufacturer Potato Products of Idaho (PPI) and a manufacturing facility in Rigby, Idaho.
The group has also been reported to be exploring the potential acquisition of Lamb Weston Holdings, a major US supplier of French fries.
For the first quarter of fiscal year 2025, Post Holdings booked net sales of $1.97bn, a 0.4% increase compared to the same period of the previous year.
Gross profit rose by 4% to $595.3m, while net earnings grew by 28.6% to $113.3m.
Diluted earnings per share rose to $1.78 from $1.35 a year ago.
Adjusted EBITDA for the quarter stood at $369.9m, representing a 2.9% increase from the prior year period.
Looking ahead, Post Holdings updated its full-year adjusted EBITDA guidance for fiscal 2025 to between $1.42bn and $1.46bn, up from the previously forecasted range of $1.41bn to $1.46bn.
