ST. LOUIS — Ralcorp Holdings Inc. said it expects its Post Foods cereal business to generate EBITDA of between $205 million and $225 million in the 12 months following Post’s separation from Ralcorp, and to incur a total of $15 million to $20 million in one-time separation costs during the two years after Post is spun off, including about $12 million in the first 12 months following the separation.
In detailing its prospective financial information for the future Post business, Ralcorp said the adjusted EBITDA figure includes projected net sales of between $940 million and $980 million, depreciation and amortization expense of between $60 million and $64 million, and “no significant increases in cost of goods sold or decrease in gross profits as a result of higher commodities prices.”
Ralcorp also noted that the EBITDA total assumes Post will grow market share in line with management expectations and that trade spending will be allocated efficiently and yield a positive return on investment.
In preliminary estimates for the first quarter ended Dec. 31, 2011, Ralcorp said its Branded Cereal Products segment posted operating profit of between $33 million and $37 million, with net sales of between $210 million to $220 million. The company said its results were impacted negatively by a reduction in trade spending toward the end of fiscal 2011.
“In the opinion of Post’s management, Post’s portfolio of brands requires additional investment in the form of more sophisticated trade spending and consumer support to stabilize and grow market share, which Post’s management considers its top priority,” Ralcorp said.
Ralcorp will release actual results for the first quarter on Feb. 7.
Separately last week, Ralcorp began its offering of $775 million aggregate principal amount of senior notes due 2022 for Post Holdings, Inc.
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