Aryzta planning to invest €34m in Brazil as cash call looms

Aryzta is planning to invest 150 million Brazilian real (€33.8m) to build a fifth bread-making facility in Brazil, just as chief executive Kevin Toland is in the middle of a disposals programme in an effort to turn around the beleaguered Swiss-Irish food group.

Sources said the move is in line with comments from Mr Toland to analysts earlier this week – when Aryzta announced plans to raise €800 million in equity to help lower its €1.6 billion net debt mountain – that the company will continue to “resource selective growth opportunities”.

Brazilian financial publication Valor Economico has reported that while the location of the planned 12,000sq m (129,166sq ft) facility has not yet been determined, it will be the company's largest factory.

Aryzta has reportedly invested 240 million Brazilian real in the country since 2014. Its local customers include food-service companies Burger King, Subway and Starbucks, while in the retail sector it supplies supermarket chains Prezunic and Walmart.

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A spokesman for Aryzta declined to comment on the investment.

"Despite the challenges that prompted the announcement of the €800 million capital raise earlier this week, it is encouraging to see Aryzta's relationship with customers remain in good shape as illustrated by this investment," said Goodbody Stockbrokers analyst Jason Molins in a note to clients on Thursday.

“[It’s] important to note that quick-service restaurants, an important channel for Aryzta, accounts for over 50 per cent of food-service revenue in Brazil.”

Profit warnings

Aryzta has issued a series of profit warnings in recent years amid problems in its core North American and European markets.

Aryzta has sold unwanted assets, including Irish restaurant supplier La Rousse Foods and its troubled Cloverhill facilities in the US, since Mr Toland took over the helm last September. The company is also seeking to dispose of its 49 per cent stake in a French frozen foods business, Picard, for which it paid €447 million three years ago.

While only 7.3 per cent of Aryzta’s revenues in the six months to the end of January were outside of Europe and North America, the so-called Rest of World division accounted for 13 per cent of earnings before interest, tax, depreciation and amortisation (ebitda). Other countries in this division include Australia, New Zealand, Japan and Malaysia.