Aryzta shares drop on revenue slump

By Geoff Percival

Aryzta shares endured a rollercoaster day — ultimately closing down 1.4%, after having been up earlier — on the back of the Cuisine de France owner reporting a further revenue decline, and investor uncertainty over the strength of its underlying business.

The Irish-Swiss baked goods group said its first-half revenues — covering the six months to the end of January — fell by 6.3% to €1.79bn, driven by a 7.4% drop in revenues at its struggling North American arm. Group earnings, on an Ebitda basis, fell by 29.6% to €161.3m and underlying net profit fell by over 53% to almost €51m.

However, the company said its European revenues rose by 0.7% and it remains on track to exceed its €450m disposals target by the end of its financial year at the end of July.

Summing up the group’s current situation, chief executive Kevin Toland said: “We are actively implementing a range of measures to improve our Ebitda. We are in a multi-year turnaround programme.�

However, Investec’s Ian Hunter who has a ‘sell’ label on the Aryzta stock said that while the first-half numbers beat expectations, the Europe outperformance came on the back of a greater than expected price/mix increase rather than underlying volume.

“The underlying business remains under pressure, particularly in North America but the sale of assets, guidance on continued disposals and unchanged covenant targets give some comfort that debt levels are being actively addressed. We are, however, still cautious on the underlying business over the short to mid-term,� Mr Hunter said.


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