Bad news seems to be baked into Aryzta

No sign of promised turnaround at Swiss-Irish food group branded a ‘shambles’

In January 2017, Jean-Philippe Bertschy, an analyst at Swiss bank Vontobel, dialled in to a conference call with Owen Killian, the then chief executive of baked goods group Aryzta. It came following a profit warning, the sixth under Killian in three years.

“I would have a very simple question and that is: what’s really the problem with Aryzta?” asked Bertschy.

Killian, once one of the best-paid Irish chief executives, resigned a few weeks later and its share price spiked 21 per cent. On Friday, almost exactly 12 months later, the price tanked again following a critical note from the Swiss analyst.

We are a full year into Aryzta’s “turnaround” and its share price is now 20 per cent lower than its previous trough under Killian. Bertschy’s question is as pertinent now as it was 12 months ago. What is the problem with Aryzta?

Acquisitions spree

Killian’s €4 billion acquisitions spree and mangled US expansion strategy sowed the seeds for its current difficulties.

To put it mildly, his acquisitions failed to live up to expectations. Its US foray resulted in it, for a while, selling products directly to consumers in direct competition with its own wholesale customers, who were understandably aggrieved.

Can Kevin Toland, the former Dublin Airport chief executive who is Killian's replacement, pull Aryzta out of its nosedive? So far, analysts are not impressed. One Société Générale researcher last month said to Toland that the company is a "shambles", according to a Bloomberg transcript.

Its chairman, Gary McGann, is said to have viewed his turnaround of Smurfit Kappa Group as the greatest challenge of his career. It was not. It will be Aryzta.