Flour milling sales decreased, reflecting the pass-through of lower wheat costs, while milling profits were in line with year-ago amounts. Profits for the rest of the segment were in line with year-ago amounts, favorably influenced by $5 million of contribution from the former Ralcorp foodservice operations.

Private Brands Private brand food items sold in domestic markets.

Sales for the Private Brands segment were $1.1 billion in the quarter, up more than $900 million over year-ago amounts. This growth reflects the acquisition of the Ralcorp businesses; most of the former Ralcorp businesses are classified within this segment (and not in year-ago amounts because of the date of the acquisition). Operating profit for this segment was $89 million as reported and $91 million adjusted for items impacting comparability; the increase over prior-year amounts reflects the acquisition. Under the recently implemented organizational structure, the company has combined all of the private brand activities across the company in the Private Brands segment; this positions it for strong customer service and effective leveraging of the company’s infrastructure to support long-term private brand growth opportunities. Early feedback from major customers about the company’s long-term plans and commitment to private brands categories, and the resulting growth potential, has been very good.

The private brands operations are now focused on six major product lines: bars, cereal, condiments, pasta, snacks, and retail bakery. Each product group has a designated general manager with full profit responsibility and cross-functional support designed to drive growth; the company also has focused private brand selling efforts, with a private brand sales leader for each retail customer team. While private brands results so far this fiscal year have not been as strong as planned, these organizational changes, as well as the accompanying focus on improving customer partnerships, ensuring appropriate pricing architecture, and winning new business, are expected to gradually improve results over time. Overall, the former Ralcorp businesses are expected to contribute about $0.25 per share of diluted EPS this fiscal year, adjusted for items impacting comparability. This is in line with original goals, with a significant portion of the profit contribution coming from this new Private Brands segment.

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