Aryzta reports annual loss of €235m but insists it has turned financial corner

Swiss-Irish food group Aryzta made a loss of €235.8 million for the year to the end of July, down from €1.09 billion the previous year, as it battles to reverse the company's financial fortunes.

The par-baked goods specialist, which owns the Cuisine de France label here and supplies the likes of McDonalds and Subway, saw revenue fall by 8.6 per cent to €1.5 billion as Covid-19 impacted sales across its food service and QSR (quick service restaurant) markets.

Expectations

Nonetheless, the company said the results exceeded expectations and that an ongoing process of cost reduction and asset disposal had successfully “de-risked the financial profile” of the group.

Despite the negative volume growth brought on by the pandemic, it noted that underlying earnings for the year were €173.4 million, only 8 per cent down on the previous year.

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“Covid-19 had a material impact on the performance of the group in all channels and geographies, particularly in our food service and to a lesser extent, QSR channels,” the company said. “The retail channel proved resilient in the period,” it said.

Aryzta has been battling a collapse in investor confidence linked to its ailing US business; more than a €1 billion in net debt - built up through a series of acquisitions in the wake of the financial crash; and its complex capital structure.

Earlier this year it sold its troubled North American arm to US private equity firm Lindsay Goldberg for $850 million (€711 million).

At the time chairman and interim chief executive Urs Jordi described the deal as an " inflection point" for the group and a vindication of its "simplification strategy".

"Aryzta begins its new fiscal year 2022 with a growing confidence having completely transformed the business strategy to a multi-local focus," Mr Jordi said in a statement accompanying the latest results.

Efficiencies

“ We have improved operational efficiencies and de-risked the financial profile. Organic growth has returned after years of decline and expect to sustain this positive organic growth trend in 2022,” he said.

The company, however, warned that the bakery industry is experiencing significant inflation in raw materials, logistics, labour and services.

“Significant pricing is required in the coming periods where contracts are renewed or new successful tenders are won to reflect inflation trends,” it said.

“Aryzta has a well-structured and professionally managed procurement process whose sole aim is to protect margins and ensure all tender pricing recovers cost inflation,” it said.