Aryzta warns on results of European division

ARYZTA HAS reiterated its full-year earnings guidance of 338 cent a share, although the food company warns that its European division is weighing on performance.

Third-quarter results from the Swiss-based baked goods firm, which produces speciality bakery products for retailers and restaurants, show that underlying revenue increased by 2.4 per cent to €722.6 million. Including revenue from its 71 per cent-owned Origin Enterprises, total sales came in at €1.17 billion.

The 2.4 per cent like-for-like growth was driven by a strong performance from Aryzta’s North American division, which experienced a 6 per cent increase in underlying revenues. Aryzta has acquired a number of businesses in North America over the last few years, including First Start Bakeries.

Revenue from the rest of the world increased by 27 per cent, or 11.8 per cent on an underlying basis.

However, the company’s European division, which accounts for about 44 per cent of revenue, continues to be affected by dampened consumer demand, according to the results.

Underlying revenue declined by 2.6 per cent in the 13-week period, with underlying revenue down by 1.1 per cent in the first nine months of the year.

According to the company, political and economic uncertainty in Europe has been compounded by the implementation of price inflation to reflect increased input costs, which has presented an “additional challenge”.

Origin Enterprises, in which Aryzta has a majority ownership, last week posted results in line with expectations, reiterating its outlook of earnings per share of 44.5 cents a share for the full year.

Aryzta was formed in 2008 after Swiss bakery group Hiestand and Irish company IAWS merged.

Earlier this year, Aryzta raised Swiss francs 174,341,799 (€144 million) through a placing of 4.25 million new shares at a price of SFr41 a share with institutional investors.

While the like-for-like sales growth reported in the third quarter was slightly behind expectations, most analysts noted the ongoing upside from Aryzta’s Transformation Initiative (ATI), which involves a restructuring of the business, as well as the strong performance in North America.