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Post Holdings, Inc. POST is shutting down two of its cereal manufacturing plants — one in Cobourg, Ontario, and the other in Sparks, Nevada — by the end of 2025. This strategic decision comes as the demand for ready-to-eat cereal continues to decline, prompting the company to cut excess production capacity and streamline operations. The closures may impact roughly 300 employees.
Post Holdings plans to transfer production to other facilities within its Post Consumer Brands network. The move is aimed at improving efficiency, cutting costs and adapting to changes in how consumers shop for breakfast options.
While the closures are meant to improve efficiency, Post Holdings estimates that it will take $63.5 to $67.5 million in pre-tax charges to wind down the two sites and transfer production. In addition, it plans to spend another $5-$7 million in capital investments to begin production at other locations. These costs are in addition to its current $380-$420 million capital expenditure guidance for fiscal 2025. Post Holdings expects the consolidation to deliver annual savings of $21-$23 million starting in fiscal 2026.
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Post Consumer Brands Faces Ongoing Pressure
The company's Post Consumer Brands segment continues to struggle. In the first quarter of fiscal 2025, segmental net sales declined 2.5% year over year to $963.9 million, despite a $54.4 million contribution from Perfection Pet Foods. Excluding that, volumes dropped 8.8% in the segment, largely due to softness in both cereal and pet food categories. Pet food performance was hurt by product rationalization and inventory shifts, while cereal volumes fell amid broader consumption declines.
POST’s Foodservice Shines as Key Growth Driver
On the upside, Post Holdings’ Foodservice segment delivered strong growth. Net sales rose 8.7% to $616.6 million and volume increased 2.8% in the fiscal first quarter. The segment benefited from strong demand across the restaurant and institutional channels, driven by gains in eggs and potatoes. Strategic pricing, value-added offerings and a focus on quick-service restaurants helped the company maintain strong margins despite industry-wide cost pressures.
Final Words on POST Stock
All said, Post Holdings is taking decisive steps to address weakening demand in its cereal and pet food categories by consolidating operations and cutting costs. While the plant closures come with short-term expenses, the company is positioning itself for long-term gains, supported by strong momentum in its high-performing Foodservice segment.
Shares of the Zacks Rank #2 (Buy) company have gained 8.5% in the past three months against the industry’s decline of 1.5%.