Milling & Baking News - May 26, 2015 - (Page 20)

Financial Results Post Holdings embraces move to value-oriented R.-T.-E. cereal ST. LOUIS - Post Holdings on May 4 completed its $1.15 billion acquisition of Minnesota-based MOM Brands Co., maker of Malt-O-Meal and other ready-to-eat cereals. With the acquisition of MOM, Post is now the third largest maker of R.-T.-E. cereals with 18% of the market, trailing only General Mills, Inc. and Kellogg Co. In a May 8 conference call with analysts to discuss second-quarter fiscal 2015 financials, Rob Vitale, president and chief executive officer of Post, said the company's optimism around MOM is "quite high." "Integration planning has gone well, and we continue to believe our synergy estimates are conservative," Mr. Vitale said. "In fact, we expect to achieve the the businesses are combined." Asked about Post's position in the value segment of the R.-T.-E. cereal category, Mr. Vitale said, "We have embraced the strategy of moving to the value segment, certainly as embodied by the acquisition of MOM. The opportunity to look at costs at MOM and the combination between Post and MOM and the resulting scale gives us the ability to use that scale to produce efficiencies that allows us to migrate into that value orientation with the impact of negative mix and still expand margins. So, yes, we will continue to have an overhang of mix as a result of our migration to value, but that will be more than offset by a reduction in cost as we bring the two businesses together." He said Post has found no negative Post consolidating cereal businesses ingredients custom blends innovation national distribution B.C. Williams Bakery Service BCW Food Products 1-800-527-4104 20 / May 26, 2015 Milling & Baking News ST. LOUIS - Post Holdings, Inc. said it plans to consolidate its Post Foods and MOM Brands cereal businesses into one group, to be called Post Consumer Brands. The business will be headquartered in Lakeville, Minn., at MOM Brands' existing facilities. As a result, Post expects to close its office in Parsippany, N.J. Post said it expects to close the Parsippany office by May 2016, a move that will affect approximately 200 employees. Chris Neugent, president of MOM Brands, will lead Post Consumer Brands. Mr. Neugent will report to Rich Koulouris, who joined Post Holdings in February to lead Post Foods Group, comprising branded centerof-the-store (Post Consumer Brands) as well as its private label retail businesses. "Combining our businesses in Lakeville will create a powerful branded platform for both branded cereal and further acquisitions," said Rob Vitale, president and chief executive officer of Post Holdings. "While I am delighted that Chris and his colleagues are joining Post, we are acutely aware of the contributions made by employees negatively impacted by this decision, and we are committed to helping them through this transition." In connection with the decisions, Post expects to incur pre-tax expenses of $27 million to $30 million for employee severance, retention and relocation payments. Approximately half of the charges are expected to be incurred in Post's third quarter of fiscal 2015 with cash payments in Post's fiscal 2016 and 2017. The expenses are a component of the previously announced total estimated onetime charges to achieve cost synergies of between $70 million to $80 million and will not impact Post's previously announced guidance for fiscal 2015. MBN full $50 million in cost reductions by the end of year two rather than year three. We also continue to believe there is meaningful upside to our $50 million estimate. The MOM combination is not simply about cost reduction, rather it positions Post as a value leader in R.-T.-E. cereal. Once again this quarter, value grew as extra large boxes grew 14.3% in dollars and bags grew 6.3%. We believe Post can grow in the segment of the category once surprises since becoming involved with MOM about 90 days ago and in fact has been encouraged that the upside appears more significant than previously thought. Net income at Post in the second quarter ended March 31 totaled $26.3 million, equal to 48c per share on the common stock, which compared with a loss of $22.6 million in the same period a year ago. Net sales increased 140% to $1,052.7 million from $438 million. MBN /

Table of Contents for the Digital Edition of Milling & Baking News - May 26, 2015

Milling & Baking News - May 26, 2015
Ingredient Update - Winds of change blow through ingredient fundamentals
Stay true to the science, grains group tells guidelines committee
Late News - Campbell baking and snacking unit strong
Table of Contents
News Comment - Asia trade pact crucially important to farm sector
Editorial - Flour output data point to eating trends
Late News
Business - ConAgra Foods to close Wisconsin cookie plant
Mondelez considering changes at Chicago bakery
ADM to acquire Chinese sweetener business
Ardent Mills showcases capabilities with bakery, kitchen on wheels
General Mills wants more from the core of its business
Kellogg’s Bryant: Signs show that cereal trends are improving
Financial Results - Investments a drag on Weston Foods first-quarter income
Post Holdings embraces move to value-oriented R.-T.-E. cereal
Post consolidating cereal businesses
News Feature - Baking mix brand conquers challenges in gluten-free innovation
Exports and Trade Issues - Growth in China’s imports of U.S. agricultural goods slows…for now
People - Former Darden executive to president of Panera Bread
Steve Cooper joins Schwebel Baking as chief operating officer
William Fife, longtime A.S.B. and B.C.C. member, dies
IFIC survey again finds people seek whole grains, fiber
Washington - The unsettled G.M.O. world
Weather Outlook - U.S. Plains rain puts end to multi-year drought
Guidelines timeline
Education and Research - Global warming seen causing wheat yield declines
Supplier Innovations
Ingredient Market Trends - Winter wheat harvest under way
Ingredient Week
Marketplace Business Network
Ad Index

Milling & Baking News - May 26, 2015