ST. LOUIS — Strong sales lifted in part by acquisitions completed in 2021 were not enough to propel Post Holdings, Inc. to a quarterly profit as the company battled cost inflation and supply chain disruptions.
Post Holdings sustained a loss of $20.8 million in the first quarter ended Dec. 31, 2021, which compared with net income of $81.2 million, equal to $1.24 per share, in the same period a year ago. This year’s results included $36.9 million in expenses on swaps, while last year’s quarter included income of $41.6 million on swaps.
Net sales increased 13%, climbing to $1.64 billion from $1.46 billion a year ago. Sales in 2021 were lifted $98 million by the acquisitions of TreeHouse Foods’ private label ready-to-eat cereal business and Peter Pan nut butter
Despite the loss, Robert V. Vitale, president and chief executive officer, told analysts during a Feb. 4 conference call that Post navigated the first quarter effectively and expects to continue to make strides in managing circumstances both under and beyond its control.
“We’re remaining nimble enough to adapt to curveballs as they come our way,” Mr. Vitale said.
Segment profit in the Post Consumer Brands unit was $71.3 million, up 1.1% from $70.5 million a year ago, while sales increased to $507.3 million, 14% from $445 million.
“In US cereal, consumption for our branded products continues to run ahead of pre-COVID levels by nearly 2%, and our related market share is just shy of 20%,” Mr. Vitale said. “Pebbles, in particular, continues to show strong growth. Last quarter, I mentioned we may have seen an inflection point in the value trade. And so far, that is holding. Our value segment sequentially improved throughout the quarter. A shift to value in the category is margin dilutive to Post, but it's profit-accretive.”
Operating profit in the Foodservice business unit increased 40% to $15.1 million from $10.8 million, while sales rose 24% to $438.6 million from $354.5 million.
“We continue to expect sequential improvement towards recovery to pre-pandemic levels of profit in 2023,” Mr. Vitale said. “During the second quarter, we are experiencing some soft demand resulting from the omicron COVID variant. Nevertheless, we now understand that the volumes bounce back quickly as variants recede, and we expect this softness to be limited to a month or two.”
Post’s Refrigerated Retail business unit, which includes side dishes, egg, cheese and sausage products, had operating profit of $13.6 million in the first quarter, down 60% from $33.7 million in the same period a year ago. Sales of $273.4 million were up 3.9% from $263.1 million the previous year.
“Refrigerated Retail made great strides this quarter,” Mr. Vitale noted. “Our staffing levels are much improved, and we saw a far greater capacity utilization. Most products remain on allocation, so we remain below our potential, but I'm quite pleased with the progress. Weetabix continues to be a rock-solid performer, all the factors our US businesses face are present in the key UK market. The pricing and mix is pacing favorably.”
Operating profit in the Weetabix unit fell 3.3% to $27.2 million from $28.1 million, while sales rose 4.4% to $118.6 million from $113.5 million.
Operating profit in the BellRing Brands business, which includes ready-to-drink protein shakes, beverages, powders and nutrition bars, increased 5.9% to $50.6 million from $47.8 million. Sales, meanwhile, rose 8.5% to $306.5 million from $282.4 million.
Looking ahead, Mr. Vitale said while supply chains are getting better — or at worse staying the same — the bigger factor contributing to unmet demand remains transportation.
“We are continuing to see situations in which we are unable to get trucks to move product and we have inventory sitting in the wrong place,” he said. “So I would say that it's also not getting worse. Perhaps slowly getting better, but the load-to-truck factor is still very high, historically high. So I don't think that we're through the woods yet on transportation, both costs and availability, that could be another couple of months.”