Ralcorp 1Q Down 8.4% On Charges, Revenue Increases

Ralcorp Holdings Inc.'s (RAH) fiscal first-quarter earnings fell 8.4% as mark-to-market losses on economic hedges and other charges weighed on the food maker's bottom-line results, though revenue grew more than expected.

The company has seen its adjusted earnings grow for more than a year, though impairment charges and other special items also weighed on the company's bottom-line results in the prior two quarters. Meanwhile, its revenue has strengthened in recent quarters, helped by gains from acquisitions and improved sales volume.

Ralcorp recently completed the spinoff of Post Foods--the manufacturer of Honey Bunches of Oats, Grape-Nuts and Post Raisin Bran--a move that allows the company to focus on its large private-label food business. The company has said it plans to use proceeds of about $900 million to reduce debt, pursue other private-brand acquisitions and for stock repurchases. It most recently acquired Sara Lee Corp.'s (SLE) North American private-brand refrigerated-dough business in October.

Ralcorp last year rejected a $5.2 billion bid from ConAgra Foods Inc.'s (CAG) to buy the entire company.

For the period ended Dec. 31, Ralcorp reported a profit of $65.3 million, or $1.16 a share, down from $71.3 million, or $1.28 a share, a year earlier. Excluding adjustments for economic hedges, Post separation costs and other items, adjusted earnings rose to $1.33 from $1.27.

Revenue increased 18% to $1.38 billion, helped by its refrigerated-dough acquisition and higher pricing in all segments.

Analysts polled by Thomson Reuters had predicted earnings of $1.38 a share on revenue of $1.32 billion.

Gross margin narrowed to 24.4% from 27.1% due to the impact of economic hedges and an acquisition-related inventory adjustment.

Overall sales volume increased 7.8%. Branded cereal products sales slid 3.2% due lower volume, partially offset by higher selling prices. Frozen bakery products saw sales rise 59%. The company also posted double-digit sales growth in its three other segments -- pasta, other cereal products and snacks, sauces and spreads.

Shares slid by 1.7% to $73.70 after-hours. The stock is up 49% in the past 12 months.

 
   -By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; [e-mail];