Higher raw material costs and lower cereal sales saw first quarter profits at Post Holdings fall 45%, as it reported its earnings results for the first time since its spin-off from Ralcorp Holdings last month.
The company, which makes Grape-Nuts, Raisin Bran, and Honey Bunches of Oats, reported net profits of $12.8m, or $0.37 per share, in the first quarter to December 31, compared to $23.4m, or $0.68 per share for the prior year period.
Post said that its cereal category sales fell by about 6%, but were mostly offset by higher retail prices.
“Post management believes the category volume decline was primarily the result of increased competition from substitutes such as quick service restaurants and other breakfast items,” the company said in a statement.
Post said that sales volumes were down for most of its brands, with the exception of Great Grains, which saw a 12.7% increase in sales over the prior year period, driven by a nationwide advertising campaign to support the brand’s re-launch.
The company reported net sales of $219.3m for the quarter, compared to $223.7m a year earlier.
According to market research organization The Nielsen Company, Post Holdings had an 11.1% market share for the thirteen week period ended December 31, 2011, compared to 11.5% a year ago, and 10.3% for the thirteen week period ended October 1, 2011.
Post Holdings completed its separation from Ralcorp on February 3, and incurred $2.7m in costs related to the separation. The first quarter results reflect the final full quarter that it was owned by Ralcorp.
Ralcorp, meanwhile, will focus on private label products, following the decision in July last year to split into two separate companies.