Aryzta moves to save cash as Covid-19 hits demand for baked goods

Baked goods group Aryzta said on Tuesday it has moved to cut costs as the spread of Covid-19 will have a "material impact" on its full-year results to the end of July, as orders from quick-service restaurants and the catering industry have been hit by closures globally.

Still, the company said that retail sales are holding up well in its key regions of Europe and North America.

"We cannot reasonably gauge what consequences will result from the situation as neither the duration nor the depth of this issue can be fully assessed at this point in time," said the company, led by chief executive Kevin Toland.

Aryzta will significantly reduce capital spend with all future capital projects suspended, the company said, adding that it is also "actively reducing capacity to meet demand". Labour costs are being cut and discretionary spend "eliminated" it said.

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The company said it has no material debt maturities over the coming 18-month period, and has cash at hand of €310 million and access to an additional €50 million of undrawn credit facilities.

Jason Molins, an analyst with Goodbody Stockbrokers, said the announcement of an "expected material impact to profitability is unsurprising", given the company's exposure to quick-service restaurants and the foodservice industry.