Swiss-Irish bakery group Aryzta claims to have stemmed the fall-off in revenue that has dogged the company for the past two years despite recording further declines at its troubled US arm.
In its latest full-year earnings the company – it makes burger buns for McDonald's and owns the Cuisine de France brand here – reported a 1.5 per cent decline in group revenue to €3.38 billion for the 12 months to the end of July.
However, it noted that organic revenue, which strips the impact of acquisitions and disposals, was flat year on year. This was proof that underlying earnings had stabilised on foot of an extensive cost-cutting and disposals programme,said chief executive Kevin Toland.
He said the turnaround in the US, where the company has suffered a series of setbacks, would take longer, but the business there was showing signs of recovery. “We will see a further period of negative organic growth in H1 in the North American market, with positive evolution expected in H2 as new contract volumes are realised.”
Aryzta last week announced it was selling off most of its holding in the French frozen foods group Picard to French firm Invest Group Zouari for €156 million, another step in returning the business to its core frozen bakery function. The market had been expecting a sale price of more than €200 million, but the disposal of the Picard was still positively received.
Shares
Aryzta’s shares have fallen 95 per cent since the company bought a 49 per cent stake in Picard in early 2015. The €447 million deal was badly received by investors at the time, and eventually led to the exit of long-standing chief executive Owen Killian.
The disposal of Picard took the total of its non-core assets disposal to €380 million.
In its latest results, Aryzta said its Project Renew cost-cutting programme was progressing well and had delivered €26 million in savings across the year. It had saved €11 million in its European business primarily from staff reductions and improved efficiency through automation.
In Europe revenue growth rose by 0.2 per cent to €1.7 billion. A difficult fourth quarter in North America contributed to a near 5 per cent fall in revenue of just under €1.4 billion.
Revenue from its rest of the world business, meanwhile, was up 6 per cent to €272 million.
“The steps we have taken in FY19 have established foundations on our path towards stability, performance and growth. This is reflected in the delivery of group level underlying EDITDA [earnings before interest, tax, depreciation and amortisation stability],” Mr Toland said. “We are realistic about and resolved to address the clear revenue challenges presented by our North American business.”
