Aryzta shares fall on weak consumer spending warning

ARYZTA’S SHARE price fell by 5 per cent in Dublin yesterday after the Swiss food company posted full-year results within expectations, but reduced its guidance for 2013, predicting that consumer behaviour would not improve next year.

The bakery group now predicts earnings per share growth of between 5 and 10 per cent next year, compared to 8.8 per cent in 2012.

Revenues for the year ended July 31st, 2012 rose by 8.5 per cent to €4.2 billion, the company reported.

Origin Enterprises, which is 69 per cent owned by Aryzta, accounted for €1.34 billion of overall revenue, with Aryzta’s core Food Group growing revenues by 11 per cent to €2.87 billion.

The revenue growth was driven by a strong performance by Aryzta’s non-European business, particulary in North America, which represents about half of the company’s overall food business.

In 2010 Aryzta significantly expanded its presence in the continent, acquiring two major bakery companies, Fresh Start Bakeries and Maidstone Bakeries.

While Arytza’s Food Europe division experienced a 7.5 per cent rise in revenue to €1.27 billion, most of this reflected acquisitions, with underlying revenue down 1 per cent.

The company said yesterday that the impact of Government austerity measures was particularly noticeable in Europe, where consumer spending remained weak.

Aryzta’s North American division experienced a 13.2 per cent rise in sales, experiencing strong organic growth of 7 per cent, while its food operations in the rest of the world jumped by 23 per cent to €222 million.

Aryzta’s EBITA (earnings before interest, tax and amortisation) increased by 12.9 per cent to €444.1 million.

Commenting on the results, Aryzta’s chief executive Owen Killian noted that the trend of higher food prices would continue and the company would “work closely with customers to minimise the impact of input inflationary pressures.”

Group ebita margin increased by 50 basis point to 10.6 per cent.

Aryzta is continuing to target 15 per cent return on investment by 2015.

Aryzta incurred €99.6 million in non-recurring costs related to restructuring costs in its 2012 financial year.

The company had net debt of €1.044 million at year end.

It closed down 5 per cent yesterday in Dublin at €38.70.

By the numbers: Arzyta results

REVENUE

€4.21 bn(+8.5%)

EARNINGS PER SHARE

337.5 cent (+8.8%)

DIVIDEND

50.63 cent (+8.8%)

EBITA (earnings before interest, tax and amortisation)

€444.1 million (+12.9%)

SUMMARY

Aryzta is a food company specialising in baked goods. Formed from the merger of Swiss bakery group Hiestand in 2008, it has a primary listing on the Swiss stock exchange, and a secondary listing in Dublin.

Aryzta has a 69 per cent holding in Origin Enterprises, which represents about 30 per cent of revenues.

Aryzta’s core food business, which includes the La Brea and the Cuisine de France brands, supplies baked goods to retailers, supermarkets and food chains across the world.

About half of its food business is in North America, following the acquisition of two major bakery companies in 2010.

While Aryzta’s 2012 results were within expectations, it warned of further pressures on consumer demand and resurgent food prices in 2013.

RESULTS FOR YEAR ENDED

July 31st 2012 (change from last year)