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ST. LOUIS - Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding company currently rated with "GREAT" financial health by InvestingPro, has announced the upcoming closure of two cereal manufacturing facilities located in Cobourg, Ontario, and Sparks, Nevada. According to InvestingPro analysis, the company appears undervalued at its current market price. The decision is part of the company's strategy to reduce surplus production capacity in response to a continued decline in the ready-to-eat cereal category.
The closures, affecting approximately 300 employees, are slated for completion by the end of December 2025. Post Consumer Brands has already communicated the decision to its workforce. With a strong current ratio of 2.39, indicating solid short-term financial stability, the company is well-positioned to manage this transition. Production from these facilities will be consolidated into other manufacturing sites within the Post Consumer Brands network.
Nicolas Catoggio, President and CEO of Post Consumer Brands, explained the move as a necessary adjustment to the market's downward trend. "The ready-to-eat cereal category continues to decline. To respond to this, we are reducing excess manufacturing capacity and optimizing our North American plant network to better utilize our production capacity," he stated.
These facilities joined Post's portfolio through acquisitions, with Cobourg becoming part of the business in July 2017 following the purchase of Weetabix, and the Sparks facility added in June 2021 after acquiring the Treehouse Foods ready-to-eat cereal business.
Post anticipates incurring pre-tax charges between $63.5 to $67.5 million due to the closures and the transition of production capabilities. Additionally, capital expenditures of $5 to $7 million are estimated for the completion of the transfer and start-up of production at other locations. These figures are incremental to the previously announced capital expenditures guidance range of $380 to $420 million for fiscal year 2025.
Despite the costs involved, Post expects the consolidation to yield annual cost savings of approximately $21 to $23 million starting in fiscal year 2026. The company cautions that these forward-looking statements are subject to change based on various risks and uncertainties.
Post Holdings, headquartered in St. Louis, Missouri, has a diverse portfolio including Post Consumer Brands, Weetabix, Michael Foods, and Bob Evans Farms, spanning several food categories from cereals to refrigerated foods. The company generated revenues of $7.9 billion in the last twelve months, with a healthy net income of $391.9 million. The information about the facility closures is based on a press release statement from the company. For deeper insights into Post Holdings' financial health and growth potential, including additional ProTips and comprehensive analysis, visit InvestingPro, where you'll find expert research reports and detailed financial metrics.
In other recent news, Post Holdings Inc. reported its fourth-quarter 2024 earnings, revealing a strong financial performance with an earnings per share (EPS) of $1.73, surpassing the forecasted $1.55. Despite a minor revenue miss, with actual revenue at $2 billion compared to the expected $2.01 billion, the company's operational strength was evident. Additionally, Post Holdings continues to expand its e-vehicle fleet and digital banking platform, reflecting ongoing strategic growth initiatives. Analysts have noted these developments, contributing to a moderately positive market sentiment. The company has set a modest revenue growth target for 2025, aiming for an EBIT target of around €200 million. Post Holdings plans to invest approximately €150 million in capacity expansion, with a long-term revenue target of €4 billion by 2030. These recent developments highlight the company's resilience and strategic focus in navigating a challenging macroeconomic environment.
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