Ralcorp Holdings reports fiscal Q4 loss of US$370.1M -- compared with earnings of US$41.9M in year-ago period -- as food maker hampered by plant closure, hedging and impairment charges

Nevin Barich

ST. LOUIS , November 30, 2011 (press release) – Ralcorp Holdings Inc. posted a fourth-quarter loss Tuesday as the food maker was dragged down by plant closure, hedging and impairment charges.

The St. Louis-based company, which makes Post cereal and a variety of store-brand foods, reported a loss of $370.1 million, or $6.72 per share, for the quarter that ended Sept. 30. That's down from net income of $41.9 million, or 76 cents per share, in the same quarter last year.

The biggest blow to Ralcorp's bottom line came from a $471.4 million impairment charge tied to its Post cereal business. The company, which announced in July that it plans to spin-off Post into a separate business, said Tuesday that it expects weaker cereal sales and as a result, the value of the Post brands needed to be adjusted.

Post makes cereals such as Honey Bunches of Oats, Grape Nuts and Post Raisin Bran.

After adjusting for these and other special items, the company said it earned $1.34 per share for the quarter versus $1.26 in the prior year. That fell short of the $1.39 per share that analysts polled by FactSet had anticipated on that basis.

Ralcorp's revenue increased 8 percent to $1.22 million to meet expectations on higher prices and pasta sales. The company acquired the American Italian Pasta Co. last year and the prior quarter included only two months of results for the pasta business.

Ralcorp said revenue from its pasta business increased 55 percent to $157.6 million this quarter. Meanwhile, revenue from its base business increased 4 percent as it hiked prices to cover higher ingredient and freight costs. However, it sold less cereal, snacks and other foods during the quarter

The company's profit margins were hurt by this slowdown, particularly in costs for cereal plants utilization and costs. Its higher-margin pasta business helped offset some of that pressure.

Ralcorp also had $2.8 million in costs related to its plans to spin off its Post cereals business and $1 million in costs for its acquisition of Sara Lee Corp.'s North American refrigerated dough business.

For the full year the company posted a loss of $187.2 million, or $3.41 per share, compared with net income of $208.8 million, or $3.74 per share, in the prior year. Ralcorp earned $5.22 per share versus $4.68 per share in the prior year on an adjusted basis.

Ralcorp's full-year revenue increased to $4.74 billion from $4.05 billion last year.

In September, ConAgra Foods Inc. withdrew its $5.17 billion takeover bid for Ralcorp, which had rejected several bids from ConAgra since March.

Shares of Ralcorp fell 24 cents to close at $80.34 but fell 33 cents in after-hours trading following the report.

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