J.M.斯马克公司：进一步的行业产能变动

Further Industry Capacity Moves… We view SJM’s announcement that it plans to close a Hostess-producing Indianapolis manufacturing facility as in keepingwith our belief that packaged food companies will likely needto consider more proactive capacity moves to avoid potentialfixed cost absorption challenges. SJMEQUAL WEIGHTU.S. FoodNEUTRALPrice TargetUSD 119.00Price (27-May-25)USD 113.93Potential Upside/Downside+4.5%Source: Bloomberg, Barclays Research Recall that back in February, we had theorized that, in light ofsofter-for-longerpackaged foodindustry volumes and the consequent deceleration in manufacturing capacity utilization rates(from the pandemic highs), we could well be primed to see an acceleration in asset optimizationmoves within a packaged food industry that's embedded with high fixed costs and a ratherinflexible operating footprint structure (see our note, U.S. Food: 'Slack'ingOff?, 02/26/25). Morespecifically, we had written at the time that we believed we were quickly approaching a point atwhich industry players will start needing to balance waiting for volume growth to resume whiledealing with the potential fixed cost absorption challenges in the interim versus the need formore aggressive manufacturing asset optimization moves. U.S. Food Andrew Lazar+1 212 526 4668andrew.lazar@barclays.comBCI, US Joshua Bader, CPA, CFA+1 212 526 3084joshua.bader@barclays.comBCI, US Johnny Shamir+1 212 526 0908tzur.shamir@barclays.comBCI, US Since then, we have seen POST announce its plans to close two additional cereal manufacturingplants in Cobourg, Ontario and Sparks, Nevada (see our note, Post Holdings, Inc.: IndustryBackdrop Favors Those That Help Themselves, 04/09/25). At that time, Post Consumer BrandsPresident and CEO Nicolas Catoggioreaffirmedour thinking when he said that the RTE cerealcategory continues to decline and, in response, POST is reducing excess capacity and optimizingits plant network to increase utilization. Notably, the April announcement followed POST'sdecisions going back as far as late 2023 to close its Lancaster, Ohio plant, which has enabled thecompany to maintain strong PCB segment margins and cash flow. Plus, more recently, we heardPEP's comments around “rightsizing and optimizing the supply chain and go-market-footprint,”on its 1Q25 earnings call in late April, which we viewed at the time as further evidence that otherpackaged food companies will likely need to also consider more proactive capacity moves toavoid potential fixed cost absorption challenges (see our note, U.S. Food: Further CapacityCommentary…, 04/28/2025). And yesterdayafternoon,SJM was the latest to announce its plans to close its Indianapolis,Indiana manufacturing facility, which manufactures products from the company's Hostessbrand, and consolidate its operations into other existing facilities, with the company nowintending to pursue a sale of the manufacturing facility by early CY26. Notably, Judd Freitag,who had only recently assumed leadership of SJM's U.S. Retail Pet Foods and Sweet BakedSnacks segments as of March 7th, commented that the decision was part of the ongoingeffortto ensure that the company's manufacturing network is optimized in such a way that enables it Please see analyst certifications and important disclosures beginning on page 3.Completed: 28-May-25, 00:56 GMTReleased: 28-May-25, 10:00 GMTRestricted - External to mitigate costs and reduce complexity in support of its Sweet Baked Snacks strategy,commentary that is consistent with both that of POST and PEP. In the case of SJM specifically, we think that the decision to curtail capacity, particularly inthe context of the Sweet Baked Snacks division having just recently come under newleadership, could well signal that management may have a fresh perspective around thelong-term growth potential of the Hostess business.That is, we think this move could wellhint at the fact that Judd Freitag, as part of his holistic review of the Hostess brand, may opt toset more prudent long-term growth expectations for the business versus the current long term~+4% CAGR outlook that the company has aligned itself with, which at this stage seems a farless likely outcome and is an outlook that the investment community has, in our view, alreadylikely discounted as somewhat less credible. As such, we'd anticipate further commentary fromFreitag around his thoughts on the Hostess brand over the coming months. While the decision from SJM is perhaps a bit unique in that the Sweet Baked Snacks divisionhad recently come under new leadership, we continue to think that the overarching dynamic ofexcess capacity is perhaps not too dissimilar from the situation many other packaged foodcompanies find themselves in currently, and as such, we think this is more evidence of thelikelihood of similar actions being taken in the U.S. packaged food group moving forward. Ofcourse, decisions such as this are never easy nor taken lightly, but we simply believe thepackaged food