Post Holdings Kicks Off 2025 With Strong Q1 Financial Results Driven by Cost Management and Diversified Portfolio
Post Holdings, a leading consumer goods holding company, has started the new year on a high note with its first quarter (Q1) fiscal 2025 financial results. According to the company's recent conference call transcript, Post Holdings achieved strong Q1 results driven by cost management and benefits from its diversified portfolio.
The company successfully executed major ERP conversions at PCB Pet and Weetabix during the quarter, showcasing commendable performance from their teams despite potential pitfalls involved with such projects. At PCB, pet and grocery had a strong quarter with improved gross margin in both, driven by cost performance. For grocery, Post Holdings benefited from improved utilization due to its plant closure completed last September, as well as freight efficiencies. For Pet, the company benefited from improved cost and plant performance.
From a volume standpoint, the cereal category declined 3.2%, slightly more than planned assumptions, while PCB's pound share remained flat at 22% with solid performance across the portfolio. Meanwhile, pet category consumption was down approximately 1%, with Post Holdings' portfolio declining 5% as the company continues to lap lost distribution points in Nutrish and experienced price elasticity in Gravy Train. However, the company is now turning its attention to innovation for pet in Q2, led by the relaunch of Nutrish, which is underway now with phasing throughout the balance of the fiscal year.
In addition, Post Holdings is rolling out innovation with new product launches in Nature's Recipe and Kibbles and bids. The company had a strong quarter driven by continued volume growth, ongoing avian influenza pricing from the May 2024 outbreak, and improved supply chain performance in its Foodservice segment. While restaurant foot traffic remained soft, Post Holdings saw some year-over-year stabilization.
However, the company continues to grow its volumes in both egg and potato products, with higher value-added eggs leading the way at plus 5%. The quarter ended on a challenging note as two of its third-party contracted farms were hit with avian influenza in December. This did not have a material impact on Q1 but will cause sourcing and cost challenges in the fiscal second quarter.
Post Holdings has successfully priced through each avian influenza outbreak in the past, and while the magnitude of current market prices and volatility are unprecedented, the company remains confident in its ability to navigate through the current landscape. The estimated cost before pricing impact on the fiscal second quarter is a headwind in the range of $30 million to $50 million, when compared to the fiscal first quarter results.
