Post's strong Fruity Pebbles results offset by soggy Malt-O-Meal sales

The pandemic-driven boost for Post cereals is fading as increased costs and supply-chain issues eat into its profit.

Lakeville-based Post Consumer Brands, which makes and markets Fruity Pebbles, Grape Nuts and Malt-O-Meal cereals, reported $1.91 billion in sales for its fiscal year that ended Sept. 30. While that was less than a 2% drop from last year's sales, operating profit for Post Consumer Brands fell almost 20% to $316.6 million.

Post Consumer Brands is the country's third-largest cereal producer and remains the largest business segment for Post Holdings, which also includes Weetabix and BellRing Brands.

Robert Vitale, chief executive of St. Louis-based Post Holdings, told investors Friday morning it was a "disappointing" end to the fiscal year, but "demand remains quite strong."

Post cereals did well "on the strength of the Pebbles franchise," where volumes rose 7%, but lower-cost cereals like those made by Malt-O-Meal suffered as consumers chose "premium" brands, Vitale said. Sales also declined on the company's bestselling cereal, Honey Bunches of Oats.

At the same time, supply-chain disruptions caused "significantly higher manufacturing costs per pound of production," Chief Financial Officer Jeff Zadoks said.

Post Holdings stock closed down 3.7% Friday after missing Wall Street's estimates.

Labor shortages were a major part of the earnings miss, officials said, with the company facing hiring and turnover issues at six of its plants, three of which still face "severe" issues.

"There is no question this is a challenging environment, and will remain one for a bit longer," Vitale said, but he expects "ingredient, packaging and freight inflation will have peaked and that labor markets will normalize" by spring.

In January, Post acquired Peter Pan peanut butter, and six months later purchased the private-label cereal unit of Treehouse Foods. Both brands were folded into its Lakeville-based cereal company.

Post Consumer Brands also announced this week it is donating 30 acres of land in Northfield to St. Olaf College. The company has two manufacturing plants and two distribution centers there, where it makes 45 types of cereal and employs more than 600 people.

The land will be used by the college's environmental studies program, and the college will "begin efforts to restore and enhance the land in the coming year," according to a news release. The hiking trails that cross the property will remain open to the public.