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St. Louis-based Ralcorp Holdings Inc. on Wednesday announced that it has begun a strategic restructuring program that will create a single center-store private label food company, providing pretax savings of $26 million to $31 million in fiscal 2013.
The company announced earlier this week that it inadvertently posted third-quarter financial results on its website that were early and potentially incorrect. It reported preliminary third-quarter results Wednesday along with initial details on the restructuring.
The restructuring will consolidate the company’s Cereal, Pasta, and Snacks, Sauces and Spreads businesses into one company across 20 food categories. The initiatives are expected to result in a one-time pretax cost of $17 million to $22 million to cover “employee separation and related expenses,” the company said in a news release.
Ralcorp said it expected to finish the restructuring in fiscal 2014, and that it would announce more details when it reports full third-quarter earnings Aug. 8.
Preliminary third-quarter results showed the company saw earnings jump from 28 cents a share in 2011 to 54 cents a share in 2012. Net sales grew 11 percent in the quarter, although the cost of merger and integration of the company’s Boomfield deal totaled $8.2 million and were a 6 cent a share drag on earnings.
“Overall, we continue to be impact by the Bloomfield transition as well as a challenging operating environment, with higher year-over-year commodity costs and lower volumes,” Ralcorp CEO Kevin Hunt said in the release. “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 operating that is more appropriately structured for sustainable, long-term growth.”