In its first quarter financial results for the period ending December 31, 2024, Post Holdings observed a downturn in pet food volumes but remained optimistic about future prospects. The company's overall net sales stood at $1.97 billion, marking a modest 0.4% increase compared to the previous year. Despite a decline in pet food volume by 13%, Post highlighted improvements in cost efficiency and plant performance as positive factors. Additionally, the company plans to focus on innovation with the relaunch of Nutrish and new products for Nature’s Recipe.
For Post Consumer Brands, which encompasses ready-to-eat cereals, pet food, and peanut butter, net sales amounted to $963.9 million, reflecting a 2.5% decrease from the same quarter in 2024. This drop was partly offset by the acquisition of Perfection Pet Foods, contributing $54.4 million in net sales. Excluding this acquisition, volumes fell by 8.8%. Jeff Zadoks, Chief Operating Officer and Executive Vice President, noted that pet category consumption decreased by approximately 1%, with their portfolio declining by 5% due to lost distribution points and price elasticity issues.
The decline in pet food volumes can be attributed to several factors. Pricing adjustments in low-margin products, shifts in customer inventories, and reduced consumption have all contributed to this trend. Specifically, the company faced challenges with its Nutrish and Gravy Train brands, experiencing lost distribution points and price sensitivity. However, Post is focusing on innovation to address these challenges, with the relaunch of Nutrish already underway and set to roll out throughout the fiscal year. Additionally, the company plans to introduce new products under the Nature’s Recipe line to bolster its pet food segment.
Despite these challenges, Post reported an overall improvement in profitability. Gross profit increased by 4% to $595.3 million, representing 30.1% of net sales, up from 29.1% in the prior year. Operating profit also saw a slight rise of 2.3% to $214.1 million. Selling, general, and administrative expenses increased by 2.7% to $331.6 million, including integration costs related to pet food acquisitions. Net earnings surged by 28.6% to $113.3 million, reflecting the company's ability to manage costs effectively.
Looking ahead, Post has raised its guidance for fiscal year 2025. The company now anticipates adjusted EBITDA between $1.42 billion and $1.46 billion, with capital expenditures expected to range from $380 million to $420 million. These investments will focus on network optimization and enhancing pet food capacity and safety. While the first quarter presented some challenges, Post remains committed to driving growth through strategic initiatives and product innovation.