Post experiences volume declines in pet food

ST. LOUIS — Post is battling volume declines in its pet food segment, brought on by rebrands and reductions in co-manufacturing and private label, as demonstrated in the company’s third quarter and nine-month financial performance. Within this segment, pet food experienced the most volume loss, dropping 13% over the quarter.

For its Post Consumer Brands segment, which includes pet food, third quarter net sales were reported at $914 million, a 9.3% decrease from $1.01 billion in the prior year period, driven primarily by a 10.3% decrease in volume. Segment profit was $120.5 million, a 6.3% decrease from $128.6 million in the prior year period.

For the first nine months ended June 30, net sales were $2.87 billion, a 6.4% decrease from $3.06 billion in the prior year period. Segment profit was $391.1 million, a 2.5% decrease from $401 million in the prior year. Segment adjusted EBITDA was $586.1 million, a slight 0.7% increase from the prior year.

“Pet is working through a challenging but much needed portfolio transition, while continuing to sustain over twice our acquisition underwriting case,” shared Rob Vitale, president and chief executive officer of Post during the company’s earnings call on Aug. 8.  

Within this portfolio transition, Post is continuing to revamp its Nutrish brand, impacting volume consumption. 

“Our pet volume consumption was down 3.7% year-over-year versus a flat category, as we saw continued Gravy Train price elasticities and accelerating declines in Nutrish from its relaunch,” explained Jeff Zadoks, executive vice president and chief operating officer of Post. “As we learned from our MOM cereal reset a few years ago, we expected short term volume challenges as we overhauled the Nutrish brand, but the magnitude has been larger than anticipated. We’re making some course corrections based on market feedback and, therefore, expect the brand recovery timeline to be extended.”

For Gravy Train, Post is adjusting pricing to help balance profitability and volume. The changes are expected to hit the market over the next few quarters.

Overall, third quarter net sales were reported at $1.98 billion, a 1.9% increase from $1.95 billion in the prior year period. Gross profit was $596.2 million (representing 30% of net sales), a 3.3% increase from $577.3 million in the prior year. 

Selling, general and administrative (SG&A) expenses were $312.1 million (representing 15.7% of net sales), a 3.8% decrease from $324.5 million in the prior year period. This includes $3.6 million of integration costs related to recent Post acquisitions. Operating profit was $234.6 million, a 15.5% increase from $203.2 million in the prior year. 

Net earnings were $108.8 million, a 9% increase from $99.8 million in the prior year. Adjusted EBITDA was $397 million, a 13.4% increase from $350.2 million in the prior year period.

For the first nine months of fiscal 2025, net sales were reported at $5.91 billion, a slight decrease of $1.5 million in the prior year period. Gross profit was $1.74 billion (representing 29.4% of net sales), a slight 0.5% increase from $1.73 billion in the prior year. 

SG&A expenses were $958.5 million (representing 16.2% of net sales), a 3.1% decrease from $988.7 million in the prior year period. Operating profit was $630.9 million, a 4.7% increase from $602.6 million in the prior year.

Net earnings were $284.7 million, a slight 0.1% decrease from $285.1 million in the prior year period. Adjusted EBITDA was $1.11 billion, a 5.5% increase from $1.05 billion in the prior year.

“We had strong results in Q3 despite the challenging macro environment with adjusted EBITDA approaching $400 million,” Vitale said. “Diversification in our business segments continues to benefit us as we sequentially saw significant improvement in our cold chain businesses more than offsetting a pullback at Post Consumer Brands. While these dynamics were anticipated heading into the quarter, the magnitude of each was a bit bigger than expected.

“While tariffs and regulatory changes to food ingredients continue to increase costs and create uncertainty, the recent tax law changes are projected to result in substantial financial benefits to Post,” he added. “Specifically, bonus depreciation and interest deductibility changes will drive an estimated $30o million reduction in cash taxes paid over the next five years. I am pleased with the overall state of our portfolio as we continue to perform well in a really tough environment.”

In addition to sharing its latest performance, Post also raised its guidance for 2025. Adjusted EBITDA is now expected to be between $1.50 billion and $1.52 billion, an increase from previous guidance of $1.46 billion and $1.50 billion. Capital expenditures are expected to be between $450 million and $480 million, which includes Post Consumer Brands’ investment in network optimization, and pet food safety and capacity, as well as plant closures. 

“Despite the challenging macro backdrop, we are expecting a strong finish for fiscal 2025 as we remain focused on the things we can control, such as cost optimization and making targeted investments to drive volumes,” Zadoks said. 

Additionally, Post also announced that Zadoks will retire effective January 2026. Zadoks originally joined Post in 2011. In 2014, he was promoted to chief financial officer and then, in December 2022, he was named COO. 

“Jeff has been an integral part of our company’s growth for the past 14 years,” Vitale said. “His impact on our company is immeasurable, and he has been a valued friend and advisor. We are grateful to Jeff for the many ways he has contributed to Post’s success and wish him the very best in his retirement.”

Nicolas Catoggio, current president and CEO of Post Consumer Brands, will take on the role of COO until a long-term leader is found. Since joining Post in 2021, Catoggio has helped the company expand its position as a leading branded and private-label ready-to-eat cereal provider into the pet food, peanut butter and pasta categories.

“Nico is a strategic leader who has led Post Consumer Brands’ growth from a ready-to-eat cereal company to a multi-category organization,” Vitale said. “I am excited to work with him to continue Post’s record of success.”

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