ST. LOUIS — Ralcorp Holdings, Inc. has initiated a strategic restructuring of its business “to improve organizational effectiveness and reduce costs.” As part of the effort, Ralcorp will consolidate its Cereal, Pasta, and Snacks, Sauces & Spreads businesses into a single center-store private brand food company.
Ralcorp said the initiative should generate annual pre-tax cost savings of approximately $26 million to $31 million in fiscal 2013. The savings will be incremental to the company’s ongoing Accelerated Cost Reduction programs.
Additionally, Ralcorp said the initiatives will result in one-time pre-tax costs of about $17 million to $22 million, consisting of employee separation and related expenses. Half of the costs are expected to be recorded in fiscal 2012 and fiscal 2013, the company said.
The strategic restructuring is expected to be complete by fiscal 2014.
Ralcorp also provided a preliminary look at its third-quarter financial results. The company said sales in the third quarter ended June 30 increased 11% behind acquisitions and higher net pricing in all segments in response to rising commodity costs. Earnings per share from continuing operations, meanwhile, increased to 54c per share from 28c per share in the same period a year ago.
“Overall, we continue to be impacted by the Bloomfield transition as well as a challenging operating environment, with higher year over year commodity costs and lower volumes,” said Kevin J. Hunt, chief executive officer and president of Ralcorp. “However, we remain confident in our business strategy and believe that we are well-positioned to compete and seek opportunities to grow despite the challenging environment. We believe the actions we are taking, both with respect to Bloomfield and the strategic restructuring, will result in a leaner, more cost efficient operation that is more appropriately structured for sustainable, long-term growth.”
Ralcorp will release full third-quarter financials and further details of its strategic restructuring initiatives on Aug. 8.