Aryzta: US down, Europe up

3 Jun 2016

Zurich-based frozen bakery company Aryzta has issued its third quarter trading update for the period ended 30 April 2016, with total revenue declining by 2.4%.

Zurich-based frozen bakery company Aryzta has issued its third quarter trading update for the period ended 30 April 2016.

“Q3 revenue development confirms an improving trend in all regions,” said CEO Owen Killian. “All outstanding long-term contract renewals are now signed, adding greater visibility to our revenue and validating Aryzta’s investment in the long-term customer partnership model. H2 margin weakness remains in-line with expectations and guidance. We have identified further potential for improved group-wide efficiencies and cost reduction initiatives. These will enhance our future competitiveness in a market that continues to demonstrate attractive growth. However, these initiatives will lead to incremental onetime cash non-recurring costs in FY 2016. We expect to report underlying fully diluted EPS broadly in-line with consensus and to generate free cash in excess of €200m in FY 2016.”

Total revenue declined by 2.4% in the quarter to €949.8m. Underlying revenue growth was 0.9% in the quarter.

Europe revenue grew by 3.6% in the quarter to €420.3m. Underlying revenue growth increased 3.9% in the quarter. Acquisitions, net of disposals, provided 1.1% growth, while currency movements impacted growth by a negative (1.4)%. Europe’s performance continues to benefit from growth in In-Store Bakery, driven primarily by growth in the discounter channel. Good progress on commissioning new capacity in Europe has been achieved, the company said, with further benefits likely from new efficiency and cost reduction initiatives. Recovery in Aryzta Food Solutions (AFS) continues, driven by improved regional performances in Ireland and UK. AFS continues to benefit from a strong innovation pipeline, an increased focus on premium offerings and strong cost control measures.

North America revenue declined by (7.0)% in the quarter to €473.5m. While sequential recovery in North America underlying revenue continues, underlying revenue growth declined by (2.3)% in the period. Disposals, net of acquisitions, reduced revenue by (2.8)% and currency movements reduced revenue by (1.9)%. The speciality bakery segment in which Aryzta operates continues to display attractive growth opportunities and the market response to the increased investment in La Brea Bakery and Otis Spunkmeyer brands remains positive. Excluding revenue with customers impacted by contract renewals, the underlying revenue growth in North America was +4.7% in the quarter, driven largely by new food items. This demonstrates the success and relevance of the customer centric business model, Aryzta said.