Weakness in Ireland and UK drags Aryzta down

REVENUES AT food group Aryzta fell in the year to the end of July, as conditions for consumers remained challenging. Group revenue declined by 8.6 per cent to €3.01 billion for the year, with underlying food revenue down 6.7 per cent to €1.68 billion.

The company was helped by a better than expected performance from its agri-nutrition subsidiary Origin, which reported underlying earnings growth of 3 per cent for the period.

Operating profit at the group, including joint ventures, increased 2.2 per cent to €305 million, while earnings per share rose 4 per cent to 244 cent.

The food group business in Europe was facing tough conditions, Aryzta said, with underlying revenue down 8.2 per cent and operating profit falling 2.9 per cent to €131.2 million. Markets in Ireland and Britain were particularly hard hit.

Convenience retail and foodservice in Ireland and Britain were the most severely impacted channels and markets, the company said in a statement.

“Continued pressure on the consumer in Europe and North America made for a challenging year,” it added.

“In Europe, the decline in revenue has been mostly evident in the UK and Ireland. The consumer has endured stringent austerity measures, significantly impacting their disposable income.”

In North America, revenues declined 4.3 per cent to €571.6 million, but operating profit grew by 3.6 per cent to €69.9 million.

The company was assisted by the fast growth of its operations in regions outside of Europe and North America. Profits at Aryzta’s “rest of world” division, which accounts for 6 per cent of its food business, grew 180 per cent last year.

Chief executive Owen Killian said the company had responded to the difficult environment by focusing on operating efficiencies, cost management and innovation.

“The operating environment is likely to remain difficult in many key markets. Aryzta’s business model is therefore focused on operational resilience, while remaining well positioned to benefit from any economic recovery,” Mr Killian said.

This is the second year of trading for Aryzta, which was formed in 2008 from a merger between Swiss baker Hiestand and the Irish firm IAWS.

Davy analyst John O’Reilly said he was expecting synergies over time from Aryzta’s acquisitions.

During the period, Aryzta acquired the North American-based Fresh Start Bakeries and pizza supplier Great Kitchens.

Aryzta’s increased exposure to the quick-service restaurant sector and to development markets are both catalysts for maintainable growth, Mr O’Reilly wrote in a note to investors.

NCB Stockbrokers’ food analyst Paul Meade described Aryzta’s performance as “solid”, with a strong performance on margins in a challenging trading environment.

Aryzta, which has its primary listing in Zurich with a secondary listing in Dublin, fell 1.1 per cent on the Iseq yesterday, finishing down 38 cent at €33.61.