Pressure built on Aryzta chief executive Owen Killian on Wednesday after he expressed regret at having to sell nearly €16 million worth of shares in the company, equivalent to two thirds of his total stake. The sale came amid an ongoing collapse in investor confidence.
Mr Killian’s surprise announcement prompted another steep decline in the Swiss-Irish food group’s share price, which fell 11 per cent to a four-year low of €33.24 on Wednesday. This follows big losses earlier in the week prompted by the release of half-year results, which showed the company again failed to hit its earnings targets and a statement which signalled growth would be erratic over the next 18 months.
Aryzta shares have shed more than 50 per cent of their value in the past 12 months on foot of concern over the health of its US business , which is said to have lost some big contracts, and criticism of its current acquisition strategy.
In a statement, Mr Killian said the disposal of his shares was triggered by “the weakness in the share price impacting the collateral value of the share”.
However, he said the sale was “not indicative” of his confidence in or commitment to Aryzta, which owns the Cuisine de France brand.
Mr Killian sold 427,250 shares in the company on Monday and Tuesday for around 41 Swiss francs (€37.40) each, the company said in a note to the stock exchange.
The sale trims Mr Killian’s holding in Aryzta to 216,530 shares, down from 643,780.
The company said Mr Killian had simultaneously been awarded 410,000 stock options, worth approximately €2.4 million, as part of the group’s long-term incentive scheme for executives.
Aryzta officials met shareholders in London on Wednesday but could not be reached for comment on the latest decline in its shares.
The maker of bread dough and frozen convenience meals has been struggling to deal with overcapacity issues in North America prompted by the transfer of business from the US to Europe.
The problems have been compounded by the loss of some valuable contracts, equivalent to about 13.6 per cent of its US business, which boasts McDonald’s and Subway among its clients.
Investors have also taken a dim view of the group's acquisition of a 49 per cent stake in French frozen food group Picard for €446 million, viewed as expensive by analysts. The company had previously signalled a move to exit the frozen food sector. Aryzta funded the transaction through the sale of most of its stake in agri-services group Origin Enterprises.
Relationship with Origin
The relationship between Aryzta and Origin dates back to 2006, when the old Irish
Agriculture Wholesale Society
(IAWS) established Origin to separate its agri-services and food businesses.
In its latest half-year results, the company’s profitability unexpectedly fell again as margins contracted by 30 basis points.
One bright point was the performance of the company’s European division where food-related revenue rose 9.5 per cent to €882 million for the six months to the end of January.