The packaged food business continues to be extremely difficult for Post Holdings Inc. (POST 0.90%), due both to changing consumer preferences and the whole sector becoming more competitive. When its fiscal fourth-quarter results were released after the market closed Thursday, they showed both positive and negative trends for the company. Here are the highlights you should know. 

Declining egg sales hurt Post Holdings Inc last quarter. Image source: Getty Images.

Post Holdings results: The raw numbers


Q4 2016

Q4 2015 

Year-Over-Year Change


$1.26 billion

$1.31 billion


Net income from continuing operations

($40.4 million)

($76.8 million)


Adjusted EPS




Data source: Post Holdings Inc.

What happened this quarter?

Post operates in a number of different markets, and that partially drives the overall numbers above. But it's the specific segments of the business that tell us more about changes within Post Holdings.

  • On a comparable basis, revenue was down 6%, driven by a decline in Michael Foods Group.
  • Gross profit improved from $333.3 million a year ago to $377.4 million and gross margin improved from 25.4% to 29.9%. The margin improvement didn't completely offset the decline in revenue, but it's a big reason net loss was smaller in the quarter.
  • Consumer brand sales were flat from a year ago at $442 million, but segment profit rose 18.5% to $77.6 million.
  • Michael Foods sales dropped 11.6% to $522.6 million, and on a comparable basis were down 16.1%. Segment profit fell 29.9% to $40.6 million. A reduction in egg sales was a big factor ing the decline as prices declined in the food service and retail channels.
  • Active nutrition sales increased 16.7% year over year to $159 million, and the segment swung from a loss of $10.9 million to a profit of $2.7 million.
  • Private brand sales fell 2.2% to $137.2 million, and segment profit fell 20.4% to $10.9 million. A 5.1% decline in nut-based butter and fruit and nut sales was a big driver of the decline.

What management had to say

Management doesn't expect the decline in Michael Foods' financials to stop, but it should be offset by more margin improvement in the company's other product lines. In fiscal 2017, they expect adjusted EBITDA of $910 million to $950 million, similar to the adjusted EBITDA of $933.9 million from fiscal 2016.

It'll be difficult for cost reductions outside of Michael Foods to offset the segment's decline because it's the company's biggest business right now. The goal will be to stay near breakeven on a net basis and try to grow out of this current downturn.

Looking forward

Operating conditions in the food business continue to be tough, and will remain so into 2017. But they are expected to improve in the second half of next year, so watch for cost reductions and higher volumes to help margins, and, potentially pricing improvement as well.

Long term, margin improvement will be needed to drive results, because it looks like Michael Foods will continue to be a drag on the top line. After some strong momentum on the margin front to end 2016, investors should watch for the trend to continue in fiscal 2017.