Analysts buy food firm's business plan

ARYZTA’S CONVENIENCE store perennials – the Cuisine de France buns, the Tim Horton chocolate doughnuts, La Brea artisan breads – have been under pressure as the recession crimped consumer budgets.

But food sector analysts yesterday were largely buying the company’s declaration of its operational efficiencies, cash flow generation and ongoing innovation.

Specifically, the company’s “complementary” acquisitions of Fresh Start Bakeries and Great Kitchens earlier this year give Aryzta something to be getting on with, in a way. It can busy itself by integrating these operations while the demand for its products remains constrained by economic conditions.

Of more interest will be the company’s brief notes on the reappearance of commodity price inflation and volatility, which “underpins a long-term trend of higher food prices”.

Rapid input price inflation can be tricky for a food group to manage, although Aryzta noted yesterday that its business model “supported stable margins”.

Agri-nutrition spin-off Origin Enterprises, in which Aryzta has a 71.4 per cent stake, is better placed to capitalise. Commenting on the outlook for Origin, the company noted that the “re-emergence of price inflation provides momentum” for the sector.