Post Holdings Announces Plan to Close Cobourg, Ontario and Sparks, Nevada Facilities

Rhea-AI Summary

Post Holdings (NYSE: POST) has announced plans to close two cereal manufacturing facilities in Cobourg, Ontario and Sparks, Nevada by December 2025, affecting approximately 300 employees. The closure decision stems from declining ready-to-eat cereal category trends and the need to reduce excess manufacturing capacity.

The company expects to incur pre-tax charges of $63.5 to $67.5 million for the production transfer and facility closures. Additional capital expenditures of $5 to $7 million will be required, beyond the previously announced guidance of $380-420 million for fiscal year 2025.

Post anticipates achieving annual cost savings of $21 to $23 million starting in fiscal year 2026. Production capabilities will be transferred to other Post Consumer Brands manufacturing locations. The Cobourg facility joined Post through the Weetabix acquisition in July 2017, while the Sparks facility was acquired from Treehouse Foods in June 2021.

Positive

• Expected annual cost savings of $21-23 million starting in FY2026
• Strategic optimization of production capacity and manufacturing network
• Reduction of excess manufacturing capacity in declining market

Negative

• Pre-tax charges of $63.5-67.5 million for facility closures
• Additional $5-7 million capital expenditure required beyond guidance
• Workforce reduction of approximately 300 employees
• Declining ready-to-eat cereal category affecting business operations

Insights

Financial Analyst

Post Holdings' facility closure announcement represents a significant operational restructuring with notable financial implications. The company expects to incur $63.5-67.5 million in pre-tax charges plus additional capital expenditures of $5-7 million to transfer production capabilities. This exceeds their previously announced capex guidance of $380-420 million for fiscal 2025.

The anticipated annual cost savings of $21-23 million beginning in fiscal 2026 suggests a roughly 3-year payback period on this investment, a reasonable timeframe for manufacturing consolidation initiatives. This ~6.5% increase in capex should be viewed against the context of long-term operational efficiency gains in a challenging market.

What's particularly telling is management's explicit acknowledgment of the continuing decline in the ready-to-eat cereal category. This move represents a defensive strategy to protect margins rather than an offensive one to capture growth. Both facilities were relatively recent acquisitions - Cobourg from the 2017 Weetabix acquisition and Sparks from the 2021 Treehouse Foods transaction - suggesting potential overcapacity issues following these M&A activities.

The restructuring aligns with industry trends of consolidating manufacturing footprints to improve utilization rates and reduce fixed costs in categories experiencing volume challenges. While creating short-term charges, this proactive capacity alignment should help preserve operating margins in a declining category.

Operations Management Expert

Post's decision to close these two manufacturing facilities while transferring production capabilities to existing locations reflects classic capacity optimization strategy in a declining market. With approximately 300 employees affected across both sites, this represents a substantial operational consolidation aimed at improving manufacturing network efficiency.

The company's approach - shifting production to other facilities rather than simply eliminating capacity - indicates they're maintaining overall output capability while reducing the fixed cost burden of excess manufacturing footprint. This suggests the issue isn't necessarily with total production volume but with suboptimal capacity utilization across multiple sites.

Setting a December 2025 closure timeline provides a reasonable transition period for both operational adjustments and managing workforce impact. The extended timeline allows for methodical transfer of production lines, retraining staff at receiving facilities, and addressing potential supply chain disruptions.

What's particularly noteworthy is that both facilities came through acquisitions rather than organic growth investments. This pattern often creates redundancies and inefficiencies across manufacturing networks. The Cobourg facility (from Weetabix) and Sparks location (from Treehouse Foods) represent the classic post-merger integration challenge of rationalizing overlapping manufacturing assets.

The $5-7 million in additional capital requirements likely reflects necessary equipment transfers, production line modifications, and potential upgrades at receiving facilities to accommodate consolidated volume.

ST. LOUIS, April 9, 2025 /PRNewswire/ -- Post Holdings, Inc. (NYSE: Post) ("Post"), a consumer packaged goods holding company, today announced plans to close two of its Post Consumer Brands cereal manufacturing facilities in Cobourg, Ontario and Sparks, Nevada.

The planned closure of the facilities reflects Post's need to reduce capacity in its cereal production network. The two facilities together employ approximately 300 employees and are expected to close by the end of December 2025. Post Consumer Brands has notified employees of the decision. Production capabilities at the facilities will be transferred to other Post Consumer Brands manufacturing locations.

Regarding the planned closure of the facilities, Post Consumer Brands President and CEO Nicolas Catoggio said, "The ready-to-eat cereal category continues to decline. To respond to this, we are reducing excess manufacturing capacity and optimizing our North American plant network to better utilize our production capacity."

The Cobourg facility has been part of the Post Consumer Brands business since July 2017, when Post acquired Weetabix. The Sparks facility has been part of the business since June 2021, when Post acquired the Treehouse Foods ready-to-eat cereal business.

Post currently expects to incur cash and noncash pre-tax charges totaling approximately $63.5 to $67.5 million in connection with the transfer of production capabilities to other Post Consumer Brands locations and closure of the facilities. Completion of the transfer and start-up of production at other locations is estimated to require capital expenditures of approximately $5 to $7 million, incremental to Post's previously announced capital expenditures guidance range of $380 to $420 million, in fiscal year 2025. As a result of the transfer of production capabilities to other locations and closure of the facilities, Post expects to achieve annual cost savings of approximately $21 to $23 million, starting in fiscal year 2026.

Forward-Looking Statements

Certain matters discussed in this release are forward-looking statements. These forward-looking statements are made based on known events and circumstances at the time of release, and as such, are subject to uncertainty and changes in circumstances. These forward-looking statements include the expected timing of the closure of the facilities, the expected amount and timing of costs associated with the closure of the facilities, the expected amount of capital expenditures associated with completion of the transfer and start-up of production at other locations, Post's fiscal year 2025 capital expenditures guidance range, the expected amount of annual cost savings and the continuing decline of the ready-to-eat cereal category. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include the occurrence of any event, change or other circumstance that could delay the closing of the facilities and the transfer and start-up of production at other locations, the possibility that the expected amount of costs associated with the closure of the facilities and capital expenditures associated with completion of the transfer and start-up of production at other locations could be greater than anticipated, the risk that the amount of annual cost savings could be lower than anticipated, and other risks and uncertainties described in Post's filings with the Securities and Exchange Commission. These forward-looking statements represent Post's judgement as of the date of this release. Post disclaims, however, any intent or obligation to update these forward-looking statements. All forward-looking statements in this release are qualified in their entirety by this cautionary statement.

About Post Holdings, Inc.

Post Holdings, Inc., headquartered in St. Louis, Missouri, is a consumer packaged goods holding company with businesses operating in the center-of-the-store, refrigerated, foodservice and food ingredient categories. Its businesses include Post Consumer Brands, Weetabix, Michael Foods and Bob Evans Farms. Post Consumer Brands is a leader in the North American ready-to-eat cereal and pet food categories and also markets Peter Pan^® peanut butter. Weetabix is home to the United Kingdom's number one selling ready-to-eat cereal brand, Weetabix^®. Michael Foods and Bob Evans Farms are leaders in refrigerated foods, delivering innovative, value-added egg and refrigerated potato side dish products to the foodservice and retail channels. Post participates in the private brand food category through its ownership interest in 8th Avenue Food & Provisions, Inc. For more information, visit www.postholdings.com.

Contact:
Investor Relations
Daniel O'Rourke
daniel.orourke@postholdings.com
(314) 806-3959

Media Relations
Tara Gray
tara.gray@postholdings.com
(314) 644-7648

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SOURCE Post Holdings, Inc.

FAQ

How many employees will be affected by Post Holdings' facility closures in Cobourg and Sparks?

Approximately 300 employees will be affected by the closure of Post Holdings' facilities in Cobourg, Ontario and Sparks, Nevada.

What are the expected cost savings from POST's facility closures in 2025?

Post Holdings expects to achieve annual cost savings of $21 to $23 million starting in fiscal year 2026.

When will Post Holdings close its Cobourg and Sparks manufacturing facilities?

Post Holdings plans to close both facilities by the end of December 2025.

How much will Post Holdings (POST) spend on facility closures and production transfers?

Post expects pre-tax charges of $63.5-67.5 million for closures and additional capital expenditures of $5-7 million for production transfers.

Why is Post Holdings closing its Cobourg and Sparks facilities?

Post is closing these facilities due to declining ready-to-eat cereal category trends and the need to reduce excess manufacturing capacity.