ST. LOUIS — After a solid fiscal 2025 start, Post Holdings Inc. ended the first half on a down note as both earnings and sales fell in the second quarter.
Post executives said macroeconomic uncertainty, stirred by US tariffs, has curtailed the merger-and-acquisition market and led the company to step up share repurchases.
“First, we performed well in a difficult environment; I expect that to continue,” Robert Vitale, president and chief executive officer, told analysts in a May 9 conference call on the quarterly results. “Second, trade policy and regulations continue to grab headlines. We will manage those as they develop. Third, consumer sentiment is weak. We expect we will need to focus on demand drivers and flawless supply chain execution. First, and last, uncertainty in the capital markets complicates M&A valuations.”
For the quarter ended March 31, net income declined 36% to $62.6 million, equal to $1.03 per share on the common stock, from $97.2 million, or $1.48 per share, a year ago. Excluding restructuring and facility closure costs, integration costs, mark-to-market adjustments and net expenses on swaps, among other items, adjusted net earnings were $88.7 million, or $1.41 per share, down 13% from $101.9 million, or $1.51 per share, in the prior-year period. Analysts, on average, had forecast adjusted earnings per share of $1.21.
First-half net income dipped 5.1% to $175.9 million from $185.3 million a year earlier. Diluted net EPS was $2.83 for both six-month periods, Post said. On an adjusted basis, net earnings decreased 6.9% to $200.7 million, or $3.13 per share, from $215.6 million, or $3.13 per share, in the fiscal 2024 half. The company had posted earnings and sales gains for the first quarter.
Adjusted EBITDA edged up 0.4% to $346.5 million for the second quarter and rose 1.7% to $716.4 million for the first half.
At the top line, second-quarter net sales were down 2.3% to $1.95 billion from $2 billion a year ago. Post noted that the period included $2.3 million in net sales from acquisitions. For the first half, net sales totaled $3.93 billion, down 1% from $3.96 billion in the prior-year period.
“Given the volatile macro backdrop and challenges associated with avian influenza, we are especially pleased with our Q2 results,” Jeff Zadoks, chief operating officer, said in the call. “Our foodservice team did a fantastic job navigating incredibly difficult egg markets as they prioritize customer supply while, at the same time, mitigating some of the expected net-cost impact. Meanwhile, our retail businesses offset volume pressures with cost control and supply chain execution.”
Zadoks also shed more light on how macroeconomic instability has impacted Post’s capital allocation plans, particularly for acquisitions. Its deals have included Potato Products of Idaho (PPI) in December 2024, part of J.M. Smucker Co.’s pet food business in April 2023, and Perfection Pet Foods and Deeside Cereals in December 2023.
“The recent tariff actions and volatility in capital markets have slowed what was an active M&A pipeline for us,” he said. “The uncertainty in this environment points to smaller tactical transactions, such as our recent acquisition of PPI or transactions where we have clear line of sight to synergies. With that said, we have continued to lean into share repurchases and have now bought approximately 6% of the company since the end of the fiscal year. From both a leverage and liquidity position, we remain very well-positioned for opportunistic capital allocation.”
In the second quarter, Post Consumer Brands, the largest business unit, saw net sales drop 7.3% year over year to $987.9 million, as volume for the segment — mainly ready-to-eat cereal, pet food and peanut butter in North America — fell by 5.8%. Post said volume decreased by 6.3% for cereal, primarily due to category declines, and by 5.4% for pet food, in part reflecting reductions in private label and co-manufactured products and distribution losses. Operating profit dipped 0.1% to $139.6 million.
Post said cereal volume fell 6.3% year over year in the second quarter. Source: ©SCOTT HABERMANN - STOCK.ADOBE.COM
“We had a solid quarter while navigating volume declines in both grocery and pet,” Zadoks said. “In grocery, our cost structure continued to benefit from last September’s plant closure. However, the cereal category declines accelerated to down 3.7%, with our branded portfolio slightly behind at down 4.5%. Category declines continue to pressure our manufacturing utilization and cost structure, which drove our recent decision to close two more plants by the end of the calendar year.”
In the Refrigerated Retail unit, net sales fell 6.6% to $224.6 million for the quarter. Volume dropped 4.9% overall, with decreases of 8.2% in the side dish, 3.9% in the egg, 15% in the cheese and 5.1% in the sausage categories. Post attributed the declines primarily to the calendar shift from this year’s later Easter holiday. Operating income sank 28% to $16.2 million from a year earlier.
Also on the downside was Weetabix, as net sales decreased 4.6% to $131.7 million on a 7.1% drop in volume. Post said the volume decline in the unit — producing ready-to-eat cereal, muesli and protein-based shakes for the UK market — stemmed mainly from the strategic exit of low-performing products (including bars), reduced promotional activity and a falloff in the cereal category. Operating profit rose 0.6% to $18.2 million.
Foodservice, mainly egg and potato products, was Post’s only business unit with top-line growth for the second quarter. Net sales surged 9.6% year over year to $607.9 million as volume climbed 2.8%. The company said the volume gain was fueled by the inclusion of ready-to-drink shakes in the current-year period, partially offset by declines in egg and potato volumes. Operating income declined 4.7% to $61.5 million.
Looking ahead, Post raised its fiscal 2025 guidance range for adjusted EBITDA to $1.43 billion to $1.47 billion, up from its previous forecast of $1.42 billion to $1.46 billion. In the Foodservice unit, Post said it expects to recover second-quarter costs of $30 million related to highly pathogenic avian influenza (HPAI), which the company had previously estimated to be $30 million to $50 million.
“Additional avian influenza pricing became effective starting in April, and our flock repopulation is on track,” Zadoks said. “Assuming no additional outbreaks in our network, we expect to balance our egg sourcing and demand by Q4, and we continue to expect we will recover the unfavorable cost ahead of the pricing impact we saw in Q2 during the remainder of fiscal ’25.”
Post pegged fiscal 2025 capital expenditures at $390 million to $430 million, including Post Consumer Brands’ investment in network optimization, announced plant closures and pet food safety and capacity, and the Foodservice unit’s investment in the Norwalk, Iowa, precooked egg facility expansion and ongoing cage-free egg facility expansion.
