Aryzta beset by revenue difficulties

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01 Dec 2017 --- Swiss-Irish food group Aryzta has experienced a 5.5 percent fall in revenue to €909.7m in the three months to 31 October. According to the group’s revenue update, Group organic revenue declined by 2.6 percent in the period. Currency had a 2.9 percent negative impact on revenue.

Earlier this year, former Aryzta CEO Owen Killian stepped down following a series of financial issues at the food group, while the company announced a record decline in shares with earnings set to decrease 20 percent this year.

This was the latest in a long line of problems at the firm which says it has been struggling with the impact of Brexit, as well as taking a financial hit after introducing its Otis Spunkmeyer snacks to the US market. 

A significant component of the reduced revenue can be explained by revenue losses at the Cloverhill facility and mitigating initiatives taking longer than anticipated to be realized, according to Aryzta.

Cloverhill Bakery is a producer of baked goods primarily sold through vending machines throughout North America. It also produces the buns used by McDonald's. Cloverhill was acquired by Aryzta in 2014.

According to the latest revenue update, despite the expected reduction from Swiss in-sourcing, Aryzta Europe had organic growth of 0.6 percent, offset by negative currency headwinds of 0.9 percent. Meanwhile, Aryzta North America organic revenue declined by 7.0 percent in the period, driven entirely by Cloverhill, says the company. 

Aryzta Rest of World had strong organic growth of 7.8 percent, offset by a negative currency impact of 5.3 percent. And, excluding the impact of the Cloverhill business in North America, Group organic revenue increased by 1.3 percent.

“The business challenges are unchanged from those outlined in September, said CEO Kevin Toland. “Europe continues to perform to expectation, including Germany, with broadly based growth across the region offsetting planned Swiss in-sourcing. Progress at Cloverhill in North America is proving difficult. Management’s priority is to continue to identify issues and opportunities to address operating performance and to maximize available free cash flow.”

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