The lapping of last year’s high-consumption trends and continued supply chain headwinds have been a downside for most food companies. Despite such challenges,
Post Holdings, Inc. ( POST Quick Quote POST - Free Report) manages to stay afloat, thanks to recovery in its Foodservice channel. Growth across the Weetabix and BellRing Brands segments and contributions from acquisitions have been driving the company. Let’s take a closer look at the factors impacting the performance of this well-known packaged food products company. Foodservice Witnesses Strong Growth
Post Holdings’ top-line growth during third-quarter fiscal 2021 was mainly supported by growth in the company’s Foodservice unit. Sales in the segment increased 79.6% to $435.1 million in the quarter. Volumes surged 56.1%, supported by gains from acquisitions as well as the lapping of lower away-from-home demand in the prior-year quarter. Egg volumes rose 47% and Potato volumes increased 98.9%.
Management is encouraged by the strong recovery in foodservice volumes. Such trends are likely to continue through fiscal 2022. The company expects foodservice volumes to return to pre-pandemic profitability in fiscal 2023. BellRing Brands Look Strong
Post Holdings’ BellRing Brands segment has been gaining from positive customer response across the Premier Protein and Dymatize banners. During the third quarter, sales in the BellRing segment amounted to $342.6 million, increasing 67.8% year on year. Sales in the Premier Protein brand gained from the RTD (ready-to-drink) shake distribution in existing and new products, strong velocities’ higher promotional activity and increased average net selling prices. Sales in the Dymatize brand surged 98.5% year on year. Sales for all other products increased 49.2%. Continued growth of BellRings Brands, backed by well-chalked investments, is likely to keep driving the company’s top line in the future. It plans to invest approximately $3 million during fiscal 2021, regarding BellRing Brands’ growth.
Acquisitions are a Growth Driver
The company has been expanding its customer base through prudent acquisitions. During the third quarter, the company’s top line included $78.5 million in net sales from acquisitions made in fiscal 2021 and 2020. The buyouts include Private label ready-to-eat (PL RTE) cereal business, Egg Beaters liquid egg brand, Almark Foods business and related assets, Peter Pan nut butter brand as well as Henningsen Foods, Inc. Post Holdings also collaborated with Hungry Planet, which is a plant-based meat company. As part of this alliance, the Foodservice and Refrigerated Retail segments will work closely with Hungry Planet to extend the distribution of Hungry Planet’s renowned plant-based meats.
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The company’s Post Consumer Brands and Refrigerated Retail segments are being adversely impacted by the lapping of last-year’s high at-home consumption trends. Softness in value and private label cereal products and declines resulting from the exit of certain low-margin private label businesses have been exerting pressure on the Post Consumer Brands unit. The company has been witnessing significant supply chain disruptions including labor and freight shortages. Consequently, service levels and fill rates have gone down, costs have increased and certain products have been placed on allocation.
Despite such hurdles, Post Holdings has been successful at maintaining its footing in the food space. The company’s efforts to boost key brand offerings are helping it to cater to the evolving demand. Such aspects are likely to keep supporting the company’s performance in the times ahead. Shares of this Zacks Rank #3 (Hold) company have gained 3.1% in the past three months against the industry’s decline of 1.7%. Consumer Staples Picks You Can’t Miss J & J Snack Foods Corp. ( JJSF Quick Quote JJSF - Free Report) , flaunting a Zacks Rank #1 (Strong Buy), delivered an earnings surprise of 200.4% in the last four quarters, on average. You can see . the complete list of today’s Zacks #1 Rank stocks here United Natural Foods, Inc. ( UNFI Quick Quote UNFI - Free Report) , also with a Zacks Rank #1, delivered an earnings surprise of 13.12% in the last four quarters, on average. The Kraft Heinz Company ( KHC Quick Quote KHC - Free Report) has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 5%.