The US-based Post Holdings has reported a decrease in adjusted EBITDA for its Weetabix business unit despite a 15.5% increase in net sales in the fourth quarter of its financial year. A fall in sterling against the US dollar contributed to a boost in sales. The company aims to invest in the UK cereal manufacturer’s brand to improve business margins. Post Holdings is set to examine Weetabix’s costs and make investments to enhance its performance. In 2024, the company will focus on simplifying the business, reducing costs, and investing in the brand to drive growth.
The tough trading conditions in the UK have impacted Weetabix’s operations, with the brand also experiencing competition from own-label cereal products amid an environment where private label products have gained significant market share. Post Holdings innovated in the business by increasing advertising investments, consulting activities to assess trade promotion effectiveness, and focusing on cost reduction and brand investment for future growth.
The performance of Weetabix forms part of Post Holdings’ Post Consumer Brands division, which saw an overall adjusted EBITDA increase of 73.1% in the quarter, reaching $199.7m. However, the division’s volumes declined by 6.2%, attributed to lower peanut-butter and branded cereal sales volumes. External factors, such as the expiration of temporary SNAP benefits, have also influenced market dynamics. The company expects the US cereal category to return to pre-pandemic levels once the effects of these temporary benefits subside.
Overall, Post Holdings’ group fourth-quarter net sales were up 23.2% year-on-year, reaching $1.95bn, driven by a recent pet-food deal. The operating profit increased 16% to $153m, although net earnings decreased by 21.7% to $65.7m. The company made a non-cash goodwill impairment of $42.2m on its cheese and dairy unit, citing challenges from private label competition causing distribution losses and declining profitability.
