Aryzta shares fall nearly 7% as quarterly revenue drops again

Shares in Swiss-Irish food group Aryzta fell by nearly 7 per cent on Tuesday after its latest quarterly figures pointed to another fall-off in revenue at its troubled US arm.

The company has been struggling to halt a slide in investor confidence linked its US business, which has seen its shares shed more than 50 per cent of their value in the past 12 months.

The latest quarterly numbers, covering the three months up to the end of April, show overall revenue fell 2.4 per cent to € 949.8 million.

In North America, where Aryzta supplies McDonalds and Subway, quarterly revenue declined by 7 per cent to € 473.5 million.

This prompted a sell-off in its shares, which closed 6.6 per cent down at €35.30 in Dublin. The shares had risen more than 10 per cent over the past two weeks.

The company’s latest figures did, however, point to a possible turnaround in the US with the contraction in like-for-like sales volumes easing from -6.2 per cent to -4.2 per cent.

“Continued progress in this region is central to Aryzta’s recovery in top line growth and consequent margin improvement as capacity fills out,” Goodbody stockbroker Liam Igoe said.

Aryzta chief executive Owen Killian said overall quarterly revenues "confirm an improving trend in all regions".

“H2 margin weakness remains in-line with expectations and guidance. We have identified further potential for improved group-wide efficiencies and cost reduction initiatives,” he said.

“These will enhance our future competitiveness in a market that continues to demonstrate attractive growth. However, these initiatives will lead to incremental onetime cash non-recurring costs in 2016,” he said.

“ We expect to report underlying fully diluted earnings per share broadly in-line with consensus and to generate free cash in excess of € 200 million in 2016,” he added.

Disposals, net of acquisitions, reduced overall revenue by 1 per cent and currency movements reduced revenue by 2.3 per cent in the quarter, the company noted.

In Europe, revenue grew by 3.6 per cent in the quarter to € 420.3 million. Underlying revenue growth increased 3.9 per cent in the quarter.

In the group’s rest of the world division, revenue declined by 3.4 per cent in the the quarter to € 56 million, although underlying revenue growth was strong at 7.5 per cent.

Looking ahead, Aryzta reiterated its guidance for full-year earnings per share, which is expected to be in-line with company collected consensus of 355.5 cent. Free cash generation is expected to exceed € 200 million, in-line with guidance, Aryzta said.