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%.

Other Top Food Bets

United Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United Natural delivered a trailing four-quarter earnings surprise of 408.7%, on average. The Zacks Consensus Estimate for United Natural’s current financial-year sales and earnings per share (EPS) indicates growth of 1.9% and 485.7%, respectively, from the year-ago numbers.

Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2. UTZ delivered a trailing four-quarter average earnings surprise of 8.8%.

The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.2% and 10.4%, respectively, from the year-ago numbers.

BRF S.A. BRFS raises, produces and slaughters poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank of 2. BRFS delivered a trailing four-quarter earnings surprise of 9.6%, on average.

The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year sales indicates growth of 0.3% from the prior-year levels.

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