Aryzta on track to meet full year estimates

FIONA REDDAN

Swiss-based food group Aryzta reported in line with expectations this morning. In its third quarter update, for the three months to April 30th, 2013, the group reported a "satisfactory" increase in food revenues of 3.6 per cent, according to Owen Killian, chief executive officer with Aryzta. However, underlying revenue, which declined by 0.4 per cent, was impacted by some volume loss following price increases in Europe and the discontinuing of direct store distribution (DSD) in the US.

In Europe, food grew by 4.3 per cent to €329.6 million, despite “weak macro consumer dynamics in the region and widening government austerity measures”. The positive result was in part due to a 7.0 per cent positive impact from the acquisition of Klemme. The group completed its €280 million acquisition of the German bakery during the period, which, Mr Killian said, “helps our channel diversification and strategic positioning in Europe”.

In North America, food grew by 3.4 per cent to €361.1 million. Looking ahead, the focus in North America is also on “leveraging the ARYZTA North America transformation to deliver further growth, as a result of the aligned business and new product customisation and development”.

Across the rest of the world, revenues grew by 0.9 per cent in the third quarter to € 57.9 million.

Aryzta also strengthened its financial position with the successful placing of a CHF 400 million (€321m) hybrid instrument during the period.

Over the coming year, the group will continue to work on its Aryzta Transformation Initiative (ATI), which involves an “enormous investment in change management to ensure our future customer relevance”. It expects this to be “substantially completed” by the end of 2014.

ARYZTA reiterated its 5-7 per cent underlying earnings per share (EPS) growth guidance for the full year and stated that it expects to return to double-digit EPS growth in 2014.

Revenues at Origin, Aryzta’s 68.6 per cent subsidiary and separately listed company, declined by 5.2 per cent to €428.0 million during the quarter, as a result of declines in underlying revenue, caused by poor weather in the UK, and unfavourable currency movements.