First quarter revenues up 32% at food group Aryzta

REVENUES AT food group Aryzta rose by 32 per cent during the first quarter, due to a strong performance by its agri-nutrition subsidiary Origin Enterprises, and robust growth in its north American food division.

Sales at Aryzta, which was formed from the merger of Ireland's IAWS and Switzerland's Hiestand in August, advanced to €865.5 million during the period ended October 25th, although Origin Enterprises, in which Aryzta holds a majority stake, accounted for 72 per cent of this.

Revenue growth in the group's food division was 7.6 per cent, as strength in its US operations offset weakness in Europe. Acquisitions added 1.6 per cent to the top line, while currency movements knocked off 2.7 per cent.

The firm noted in its interim management statement that the current financial crisis has affected consumer behaviour on the high-street, with a slowdown in growth evident across most channels, particularly in the British and Irish markets. Growth in its European food division fell back from 9.4 per cent for the full-year 2008 to 4.2 per cent.

In the US, its food division maintained its "accelerated revenue growth", with an underlying increase of 19.5 per cent in the period, while Aryzta's developing market segment, which refers to its Malaysian business, increased by 5.1 per cent. Growth in the US was driven by changing consumer habits, including an increasing tendency to eat at home rather than in restaurants, as well as the contribution from Otis Spunkmeyer, a firm Aryzta acquired in 2006.

Having successfully negotiated financing facilities of more than €1 billion during the summer, Aryzta said that it continued to have a strong balance sheet, while at the period ended July 31st it had pro forma net debt of €553 million.

The group also noted that its new bakery and innovation centre at Grangecastle, Co Dublin, is on plan, and will be fully commissioned during the period ending January 31st, 2009.

Commenting on the statement, NCB Stockbrokers said the firm remained on track to deliver at least 10 per cent earnings per share (EPS) growth in the current year, "with upside to forecasts arising from a continuation of a very strong US revenue growth".

Looking ahead, the group said it was "well positioned" in the current trading environment. Owen Killian, chief executive of Aryzta, said that despite the global banking crisis, which "poses issues for customers, suppliers and indeed primary producers", food is a "very resilient and stable business".

Aryzta closed up 5.4 per cent at €22.05 in Dublin yesterday.

Origin update

Aryzta's majority-owned subsidiary Origin Enterprises, the agri-nutrition and food company, also released a trading update yesterday, reporting a 71.7 per cent increase in revenue in the first quarter of its 2009 financial year.

According to the firm, group revenue jumped to € 424.7 million in the quarter ending October 25th, with acquisitions completed during the course of the previous financial year accounting for almost all of this growth. There was a 7.8 per cent increase in revenue for underlying operations.

The first quarter is particularly important to the firm as, reflecting the seasonality of the business, approximately 20 per cent of the annual profits are typically earned during this period.

The firm benefited from positive growth momentum in its agri-nutrition division during the first quarter.