ST. LOUIS — Despite a sharp earnings decline in the second quarter ended March 31, Post Holdings, Inc. said strategies to spur a turnaround in the company’s multi-year negative share and revenue performance are beginning to materialize.
In a May 13 conference call to discuss second-quarter results, Terry Block, president and chief operating officer, said Post’s share improved throughout the second quarter as marketing and sales efforts continued to increase, leading to the company’s highest four-week share in the ready-to-eat cereal market in more than a year at 10.7%, and the highest package share in two years at 11% for the period ended March 30.
Mr. Block said the gains were led by Great Grains and Grape Nuts, which saw volumes increase 8.2% and 2.4%, respectively, over the same quarter a year ago. He said new item distribution and new marketing programs drove the gains.
“Great Grains accelerated growth throughout quarter two behind new distribution achievement on Great Grains Protein Blends and new advertising as the Great Grains’ consumer responds well to advertising,” he said. “Both factors helped contribute to Great Grains becoming one of the fastest-growing better-for-you positioned cereal brands. Increased promotional support, new distribution on Grape Nuts Fit, and the first advertising on Grape Nuts in 10 years helped propel growth on the Grape Nuts brand for the quarter, helping Grape Nuts reach a full-year share high.”
Meanwhile, dollar volumes for Pebbles and Honey Bunches of Oats declined 7.1% and 7%, respectively, Mr. Block said. He pointed to increased competitive promotional activity and distribution losses on weak line extensions such as Honey Bunches of Oats flavors, Pebbles Boulders and Pebbles Marshmallows. Mr. Block noted Post is pleased with the company’s efforts to promote the Honey Bunches of Oats brand to Hispanic consumers. He said the efforts “have contributed to the brand indexing stronger than any other brand among this growing demographic segment.”
Another positive in the Honey Bunches of Oat brand has been Honey Bunches of Oats Greek, which combines Greek yogurt in and on the granola clusters with multi-grain flakes.
“It is off to a good start, capturing consumption dollars totaling approximately $7.2 million for quarter two,” Mr. Block said. “We are adding to the (Honey Bunches of Oats) Greek line-up in June with the addition of an extremely tasty mixed berry Greek line extension. Additionally in June, (Honey Bunches of Oats) is introducing a line of Three Granolas, replacing the Just Bunches line extension, seeking to improve (Honey Bunches of Oats) performance in this faster-growing sub-segment of the cereal category.”
Finally, Mr. Block said Post is executing against its strategy to better address economically stressed consumers with “quality Post cereal alternatives.”
“The ongoing Post Good Morenings test has provided learnings with regard to product, size, mix and marketing,” he said. “We’ll be deploying some of this learning into new items for introduction later this calendar year. Our previously announced selective private label program is in its infancy but demonstrating progress in terms of account presentation and active account considerations. However, shipments were negligible for the quarter.”
For the quarter ended March 31, Post Holdings had earnings of $4.3 million, equal to 13c per share on the common stock, which compared with $10.5 million, or 31c per share, during the same quarter of the previous year. Sales for the quarter were $248.2 million, down 1% from $250.5 million during the same quarter of the previous year.For the six months ended March 31, the company saw earnings decline 49% to $11.9 million, equal to 36c per share, which compared with earnings of $23.3 million, or 68c per share, during the same period of the previous year. Sales for the six months were $485.1 million, up 3% from $469.8 million during the same period of the previous year.