Revenues fall at Swiss-Irish food group Aryzta

Revenues at beleaguered food group Aryzta fell by 2.1 per cent in the full year, as the Cuisine de France manufacturer struggled with rising costs in its North American operations and lower margins in its UK business due to Brexit.

The Swiss-Irish food group, which has just seen new chief executive Kevin Toland take up his role, said it has been "a year of significant change", but that it has made "considerable progress in putting the core elements of the new leadership team in place". Mr Toland, formerly of airport operator DAA, took up his new role in September 2017.

Shares in Aryzta fell sharply this year, as the group issued a series of profit alerts and disappointing earnings forecasts.

Revenues fell by 2.1 per cent to €3.8 billion in the 12 months to July 31st, 2017, the group said, with revenues down by 0.5 per cent to €1.74 billion in Europe, on the back of “unfavourable currency movements”, the impact on UK margins of weaker sterling, and challenges in German operations.

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Revenues were down by 5.7 per cent to €1.8 billion in North America, initially driven by declines with contract renewal customers, Aryzta said, but was further compounded “by co-pack customers in-sourcing volumes earlier than anticipated”.

Labour costs

Increased labour costs were also a factor. Across the rest of the world, revenues rose by 15.8 per cent to €259 million.

Earnings before interest, tax, depreciation and amortisation (ebitda) declined by 31.1 per cent to € 420.3 million, while the ebitda margin fell by 460 basis points to 11.1 per cent. Pre-tax profits slumped by 43 per cent to €208 million.

The group’s joint ventures, which include its 49 per cent stake in frozen foods group Picard, performed well, contributing € 21.3 million of net interest and tax, an increase of 35.7 per cent.

With regards to its Picard investment, which had been the cause of discussion, Aryzta said that its intention is to achieve a “fair market return only once all shareholders are aligned in pursuit of an exit”.

Aryzta has proposed a dividend of 0.3489 Swiss francs (€0.3024).