Aryzta sales volumes continue to decline

SALES VOLUMES of bakery products manufactured by food group Aryzta continue to decline, as the recession forces consumers to cut back, the company said yesterday in a trading update to shareholders.

In a statement covering the first nine months of its financial year, Aryzta, which owns the Cuisine de France brand, said deteriorating consumer sentiment was resulting in lower spending in most of the channels in which it operates.

Sales at the group reached €2.43 billion in the first nine months, with underlying growth down 0.7 per cent.

“Revenue growth has slowed in all markets and was negative in our food business in Europe,” said Owen Killian, the chief executive of Aryzta, which was formed in 2008 from the merger of Irish company IAWS and Swiss baker Hiestand. But he added that the company was still on track to deliver earnings in line with analysts’ expectations.

The company, which is based in Zurich, said its new bakery at Grangecastle, Co Dublin, was improving its ability to deliver baked goods to its customers.

Aryzta’s North American division was also affected by continued weakening in consumer spending, but the company said it was “responding well to the changed economic landscape”.

The company said it had a strong balance sheet and free cash flow. It negotiated financing facilities of more than €1 billion in 2008. As of January 31st, 2009, it had “conservative” net debt of €625.5 million.

Origin Enterprises, the agribusiness company in which Aryzta has a 71 per cent stake, is expected to make a substantial write-down in the value of its investment properties. The company has standalone borrowings that are non-recourse to its parent. Origin yesterday said it will pay its first dividend to shareholders this year, after revenue at the company increased 9 per cent to €1.15 billion in nine months to the end of April. On the Iseq index in Dublin, Aryzta’s shares climbed 1.2 per cent to €20.90.