Aryzta boss struggles to stay relevant as pressure mounts

Aryzta boss Owen Killian rarely delivers a speech without referencing his favourite theme: relevance. He puts the company's rise from ailing feed and fertiliser business to global bakery giant down to an unbending desire to remain relevant to consumers.

However, for investors, it seems Killian himself is now struggling to stay relevant.

Disquiet over the current state of the company has seen Gary McGann, the former CEO of Smurfit Kappa and current chairman at Paddy Power Betfair, drafted in as chairman two weeks ago, apparently to ease concern over centralised decision-making.

On Monday, it was revealed the Swiss-Irish food group had withheld Killian’s €958,000 performance-related bonus for 2016 pending a pick-up in revenue.

The latter move also appears to be an effort to appease investors, reeling from a near 50 per cent crash in the value of their shares over the last 18 months.

Central to the company’s woes is the performance of its US business, which is reported to have lost some big contracts in the quick serve sector there. Attempts to streamline the business and market its product directly to consumers have yet turn the dial in the right direction and investors appear to be losing patience.

Minority stake

Killian also blotted his copybook with the acquisition of a 49 per cent stake in French frozen food group Picard for €446 million last year, funded through the disposal of its stake in agricultural services group Origin. The market took a dim view of the purchase, deeming it too expensive for a minority stake. There was also the matter of Aryzta having previously signalled a retreat from the frozen food sector.

The sudden and unexpected sale by Killian of shares amounting to close to two-thirds of his stake in the company was deeply unwelcome news for other investors, and did little to instil confidence in his leadership at a difficult time for the group.

Now, it appears that McGann will be charged with determining if the man who built Aryzta has become too stale for the bakery business.

As McGann is also charged with overseeing the ongoing integration of the Paddy Power and Betfair businesses, investors will hope he has not bitten off more than he can chew.