Aryzta shares up 8% after US acquisitions boost outlook

FOOD GROUP Aryzta enjoyed a near 8 per cent climb in its share price yesterday as it announced two new US-based acquisitions that will double its production capacity and expand its global footprint.

The company, which was formed following the IAWS takeover of Swiss baker Hiestand, bought Fresh Start Bakeries for $900 million and the pizza supplier Great Kitchens for $180 million.

Fresh Start operates 29 specialist production facilities across the US, Canada, Germany, Poland, Sweden, Spain, Brazil, Australia and New Zealand and has three joint ventures located in North America, Chile and Guatemala. It makes products not currently supplied by Aryzta, such as burger buns and ciabatta bread.

Great Kitchens is one of the leading pizza manufacturers in North America serving regional and national grocery chains and retail stores with premium quality pizzas and sandwiches.

Both businesses supply to the quick-service restaurant sector, with 70 per cent of sales in North America.

The combined revenue of the two businesses is €1.03 billion, with associated earnings before tax and write-offs of €133 million.

Aryzta, which counts Cuisine de France and La Brea bakery among its brands, raised its outlook for the full year, saying it expects underlying earnings per share to rise due to the new acquisitions.

In an interim trading update, the group said it continued to experience deterioration in revenues. Like-for-like sales fell 4.6 per cent in the quarter to the end of April. But it added that there had been a “modest improvement in the group’s operating environment”.

Investors responded favourably to news of Aryzta’s acquisitions, with its share price rising 7.8 per cent to €28.86 on the Iseq index.

NCB Stockbrokers food analyst Paul Meade said Aryzta’s European food revenues were ahead of expectations and that the two new acquisitions would be positive for Aryzta.

“These acquisitions coupled with the modest improvement in underlying trading suggests growth in revenue is set to re-emerge,” he said.

Goodbody Stockbrokers analyst Liam Igoe said the deals gave Aryzta “a substantial exposure” to the quick-service restaurant sector and “a more credible model” for expanding its business globally. It would also make the company more resilient to recession by broadening its customer base, Mr Igoe added.