Revenues at Swiss-Irish food group Aryzta fell by 5.2 per cent in the first three months of its financial year, as the Cuisine de France maker reiterated its target of mid- to high single-digit earnings for 2019.
In the three months to October 31st, Aryzta reported group revenue of €862.3 million, down by 5.2 per cent but up by 0.3 per cent on an organic basis. Aryzta said the decline was due to the impact of disposals and currency movements.
Aryzta chief executive Kevin Toland said it continued to work on "challenges facing the business" during the first quarter, and remains "resolutely focused" on its core, the frozen business-to-business bakery market, as it implements its multiyear turnaround strategy.
Earlier this month Aryzta successfully completed a massive rights issue, raising net proceeds of about €740 million. A total of 97.4 per cent of shareholders took up their rights at a cost of one Swiss franc (€0.88 cent) a share, however hundreds of Irish shareholders lost out after being effectively locked out of the fundraising.
Aryzta said it would use €455 million of the proceeds to pay down debt and a further €285 million to restructure the group.
Repositioning
The proceeds of the rights issue will also provide the necessary capital to implement Project Renew, Aryzta’s competitive repositioning programme targeted to achieve €90 million of annual run-rate savings by the end of 2021.
The strategy is designed to return the company to health after a sequence of profit warnings and missed earnings targets; it centres on a three-year €200 million cost-cutting programme and the selling off of non-core assets.
The company has previously identified a number of risks to the strategy, including the possibility that it fails to achieve the necessary savings from its cost-cutting programme, which it described as a “complex exercise” involving 200 initiatives and absorbing a lot of management time.
Aryzta has also pointed out that “changing dietary trends and the increased emphasis on health and wellness among consumers” could impact demand.
Mr Toland said: “Stronger capital structure and improved liquidity will allow the management team to transition from a position of perceived commercial stress to a position of stability and instead to focus on strengthening our customer relationships, enhancing our operating efficiency, ongoing deleveraging of our balance sheet and, in time, returning the business to performance and growth.”
Aryzta said it expects mid- to high single-digit growth in its organic earnings before interest, tax, depreciation and amortisation for full-year 2019.
