Cantillon: is Aryzta bakery boss still on a roll?

There was a time when Aryzta boss Owen Killian could do no wrong. Back in the 1990s, he transformed the Irish Agriculture Wholesale Society (IAWS) – a mishmash of struggling feed and fertiliser businesses – into a highly profitable food retail business.

The change was forged on the purchase of Cuisine de France in 1997 for IR£50 million (€64 million), considered a ludicrous price by analysts at the time.

However, the money it generated funded further acquisitions in British baking group Delice de France and La Brea Bakeries in California, the pioneer of the artisan bread movement in the US, and a tie-up with coffee and doughnut chain Tim Hortons.

In 2007, Killian made his next play, championing a strategic merger with Swiss food group Hiestand, considered a coup for the Irish company, out of which Aryzta was born.

Since then the Swiss-Irish enterprise has mushroomed into a food behemoth with a dizzying array of operations across North America and Europe, generating a near €5 billion turnover.

Killian’s Midas Touch was feted at gala lunch in the RDS late last year, at which he was awarded the society’s coveted gold medal for industry.

However, the intervening period has proved more challenging. A series of profit warnings, predicated on a downturn in the US business, combined with the acquisition of a 49 per cent stake in French frozen food group Picard, deemed an expensive deal by investors and analysts, has seen its share price suffer.

At the start of the year, it was trading at around €76; yesterday it closed at €42.27.

This followed another surprise announcement that it was selling its remaining 29 per cent stake in agri-services group Origin Enterprises for €228 million. Analysts questioned the timing of the move ahead of its results on Monday and given the current market volatility.

The relatively low placement price of €6.30 per share and the company’s rather opaque statement about strengthening its balance sheet compounded the feeling that all is not well in Killian’s bakery empire. Monday’s results might give some indication.