Dive Brief:
- Post Holdings is still "cautiously optimistic on the cereal category," after reporting 0.2% dollar growth Thursday and a 0.5% volume decline for the segment in the first quarter, president and CEO Rob Vitale said on a recent earnings call.
- Post's largest brand, Honey Bunches of Oats, increased base volumes by 3%, though incremental volumes fell 12%, so results ended up flat for the quarter.
- The company saw net sales of $1.2 billion for the first quarter, a 16.3% jump year over year, due in part to its MOM Brands acquisition, completed last year. Post boosted its full-year guidance for adjusted EBITDA to between $810 million and $840 million, an increase over the prior range of $780 million to $820 million; anticipated synergies within the Post Consumer Brands segment drove the guidance increase.
Dive Insight:
Post's expectations — or lack thereof — in terms of growth for the struggling cereal category contrast from the perspective of other major cold cereal producers like General Mills and Kellogg. Post has "assumed a zero category growth" for cereal in its long-range planning.
Kellogg CEO John Bryant told The Wall Street Journal in September that he expected an aging population and increased interest in cereal for uses beyond breakfast would improve the performances of its cereal brands. General Mills CEO Ken Powell corroborated the sentiment, telling TheStreet that same month that the cereal segment seemed to be stabilizing thanks to increased investment and innovation in the category.
Sales for Post's Michael Foods Group segment declined 2.2% as the aftermath of last year's bird flu outbreak continues to impact the volume of the company's egg supply, though segment profit soared 92%. Hen repopulation began in the first quarter but has not reached full effect as the hens have to reach egg-producing age. The company expects the supply to increase more significantly this quarter, though Vitale told investors that he doesn't expect pre-bird flu production levels until the third quarter.
Sales for Post's 2014 acquisition PowerBar took a hit, particularly in North America, contributing to an 11% decline in net sales for the Active Nutrition segment. Premier Protein, however, reported growth "driven by increased distribution and organic growth predominantly in the club channel," CFO Jeff Zadoks said on the earnings call. The latter has benefited from the rise of protein as a functional ingredient in demand by consumers and the increased popularity of functional sports nutrition-related foods and beverages, an industry trend predicted for this year by Mintel. However, PowerBar didn't seem to benefit from the trend.