Swiss-Irish bakery firm Aryzta could dispose of assets over the next four years as it looks to recover from disappointing full-year results.
For the 12 months to the end of July, the company posted group revenue of €3.8 billion – down 2.1% – with pre-tax earnings falling 31.1% to €420.3 million and underlying net profit dropping 42.5% to €179 million.
Its reported net loss was €970.8 million, and Aryzta doesn’t expect to see any significant change in those fortunes over the next year.
Presenting the results to investors this week, the bakery firm’s management said it would aim to “deleverage [the] balance sheet through cash generation and asset realisations over four years”. The group is being encouraged to sell some of the 57 bakeries it owns across Europe, the Americas and Asia-Pacific.
It also placed a strategic focus on the B2B frozen bakery and European food solutions sectors, saying it was right that Aryzta shouldn’t try to become a retailer, a consumer brand, or a competitor for its own customers.
The poor results were compounded by sustained decline in Aryzta’s North American business. Underlying growth in North America was -21.7%, representing a loss of €132 million. North America accounts for 47% of Aryzta’s business, narrowly beating the European market, which makes up 46%.
In North America, volume declined 8.5% and revenue by 5.7%, driven by volume reductions from some of the group’s larger customers.
The company said there were a number of factors to blame for “the very severe loss in margin” – including those volume losses and subsequent negative operating leverage, increased labour input costs, and unsuccessful investment behind Aryzta’s B2C food offering.
In Europe, volumes and revenues were both down by less than 1%, though the region still contributed a 10% decline in underlying EBITDA growth.
The company has appointed a new CEO, Kevin Toland, and a new CFO in recent weeks to try and arrest decline in its sales. It has also announced the completion of a new €1.8bn refinancing facility underwritten by Bank of America Merrill Lynch, HSBC, Rabobank and UBS.
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