ST. LOUIS — Post Holdings, Inc.’s Consumer Brands and Foodservice business units performed well during the first quarter of fiscal 2019. Yet the business units’ performance was masked by a charge taken by the company during the quarter and a difficult comparison to the first quarter of the previous fiscal year.
Net income for the quarter ended Dec. 31, 2018, was $123.6 million, equal to $1.85 per share on the common stock, down 58% from $291.5 million, or $4.42 per share, in the same period a year ago.
Sales for the quarter fell slightly to $1,411.3 million from $1,433.1 million the year prior.
First-quarter net income included a charge of $51.7 million related to non-cash mark-to-market adjustments on interest rate swaps, according to the company. First-quarter 2018 net income also included a $263.6 million income tax benefit.
On an adjusted basis, Post Holding’s first-quarter net income totaled $83.3 million, equal to $1.11 per share, which compared with $67.9 million, or 88c per share, during the same period of the previous year.
“Our Consumer Brands platform continues to perform well,” said Robert V. Vitale, president and chief executive officer, during a Feb. 1 conference call with securities analysts. “We had a strong consumption quarter, with dollar market share reaching 20.1%, although we did benefit from heavier trade activity in the first quarter versus our plans for the balance of the year.”
The Consumer Brands business, which includes the company’s ready-to-eat cereal business in North America, had $455.3 million in sales, a 5.4% increase compared with the year prior. Volume rose 4.8% during the quarter.
“Pebbles, other licensed products and Honey Bunches of Oats drove the majority of the volume growth, while the increase in average net pricing resulted from favorable product mix and pricing taken later in the quarter,” said Jeff A. Zadoks, chief financial officer. “Post Consumer Brands’ adjusted EBITDA improved 8% compared to prior year. Volume gains and reduced advertising and consumer spending drove the improvement, while meaningful year-over-year systemic inflation and freight commodities and wages persisted this quarter.”
Sales rose 11% to $408.1 million in the company’s Foodservice business unit. The business manufactures primarily egg and potato products, which generated increased volumes of 5.8% and 4.6%, respectively.
Post’s Refrigerated Retail business unit, which includes side dishes, egg, cheese and sausage products, had sales of $261.6 million during the quarter, an increase of 85% when compared with the previous year.
Sales in Post’s Active Nutrition business were $185.8 million during the quarter as the company has worked to manage manufacturing capacity constraints.
Weetabix sales rose 1.2% during the quarter to $100.9 million. Management said it is currently in the process of considering its options based on what may happen due to Brexit.
“What we are doing is attempting to make sure that if we are in a situation in which there is a port disruption that adds days, weeks or even months to the supply chain that we’re ready to react to whatever reality develops,” Mr. Vitale said. “Likewise, where we have export business, this quarter, we’re starting to build inventory outside of the U.K. So, we have the other side of that equation balance.”
He added that the bulk of Weetabix products are sourced within the United Kingdom. It is mostly packaging and vitamins that are not sourced in the region.