Has Aryzta turned the corner?

Chief executive Kevin Toland insists the baking group is on the road to recovery

How do you know when you've hit rock bottom? You rarely do, as Aryzta chief executive Kevin Toland found out, to his chagrin, in 2018.

After several years of disappointing earnings and a near complete wipeout of shareholder value, he confidently predicted the bad times were over and the reset button firmly pressed, only to be overtaken by several industry-wide headwinds to do with labour and input costs.

This forced the Irish-Swiss baking group, owner of the Cuisine de France brand here, into yet another profit warning in May 2018, further depressing investor sentiment.

The new management team have been criticised for failing the grasp the parlous financial position of the company quickly enough and for delaying the inevitable capital raise needed to shore up its ailing balance sheet. This led to significant shorting of the stock last year.


In fairness, they had inherited a mess from the previous team which had undetaken a debt-fuelled acquisition spree in the aftermath of the crash and shifted the company’s focus away from its core B2B frozen bakery business, putting it in direct competition with customers.

Cost cutting

At a media briefing at the company’s Grange Castle plant in Dublin yesterday, Toland admitted he had called “the baseline too early” but insisted the company was now on the right track, courtesy of a successful €790 million capital raise in November, a €200 million cost-cutting programme and, perhaps most importantly of all, a return to its traditional B2B strategy.

The company’s original success was based on bringing fresh bakery products to a host of key clients in the quick-serve restaurant and retail sector, a consumer trend that still dominates, and that’s now the undiluted focus once again.

Has Aryzta finally put the bad times behind it? Not everyone seems to think so. Its shares fell on Monday by a further 9 per cent after Credit Suisse issued an underperform recommendation, suggesting debt levels were still a cause for concern.