Post Holdings, Inc. ( POST Quick Quote POST - Free Report) unveiled that its Consumer Brands business will invest up to $110 million to expand cereal production capacity at its Sparks, NV facility. Management expects the expansion to conclude in 2025, while initial new capacity is likely to be available by the end of 2024. The envisioned expansion will give Post Consumer Brands increased production volume to counter capacity constraints and meet consumer demand efficiently. The move will help the company lower transportation costs to cater to West Coast customers. Management highlighted that the expansion would create 30-40 new job roles. Image Source: Zacks Investment Research What Else Should You Know?
Post Holdings is benefiting from recovery in the Foodservice business. During the second quarter of fiscal 2022, foodservice sales increased 22.4% to $451.9 million. Volumes rose 10.9% owing to the increased away-from-home egg and potato demand and distribution gains. Management highlighted that volumes in certain channels and product categories in the foodservice business have almost recovered to pre-pandemic levels. In aggregate, overall foodservice volumes are still below pre-pandemic levels. That being said, management expects the foodservice business to return to pre-pandemic profitability in fiscal 2023.
The company strategically increased its presence through acquisitions. During the second quarter of fiscal 2022, Post Holdings’ top line included $102.1 million in net sales from acquisitions. These acquisitions include the Private label ready-to-eat (PL RTE) cereal business, the Egg Beaters liquid egg brand, the Almark Foods business and related assets and the Peter Pan nut butter brand. On Apr 5, 2022, Post Holdings acquired Lacka Foods Limited. Lacka Foods is a U.K.-based marketer of high protein, ready-to-drink (RTD) shakes under the UFIT brand. Post Holdings acquired Almark Foods (or Almark) on Feb 1, 2021. Almark, renowned for its hard-cooked and deviled egg products, provides conventional, organic and cage-free products. On Jan 25, Post Holdings acquired the Peter Pan peanut butter brand. The Peter Pan peanut butter is one of the leading brands that cater to a diversified customer base in key channels. All said, Post Holdings’ plan to expand cereal production capacity at its Sparks facility will help the company manage its network geographically. POST’s stock has increased 11.9% in the past three months against the industry’s 4.6% decline. 3 Solid Food Stocks
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