Aryzta shares fell a further 7.9% yesterday bringing the Cuisine de France owner’s stock down nearly 28% in the past two days and wiping nearly €800m off its value.
Earlier in the day, the Irish-Swiss baked goods group’s share price had fallen up to 9.7%.
On Thursday, Aryzta announced a profit warning which sent its shares plummeting more than 20%, prompting analysts to suggest significant hurdles — mostly in the form of cost pressures — continue to block management’s profit recovery ambitions.
Aryzta said pressures remain in its US and British operations and that its full-year earnings for the 12 months to the end of July are likely to be down by around 20%.
It had previously guided for earnings to be in line with the previous year’s tally of around €420m.
“The question on investors’ minds over the past two years, following the dramatic decline in share price, has been whether or not there is value in the stock at current prices,” according to Investec Ireland analyst Ian Hunter.
“We have opined that, notwithstanding concerns over the highly leveraged balance sheet, we believe the company has to show a turnaround in the underlying business before we can see value in such a risky play.
“As such, we believe that there have to be signs of sustainable progress in the improvement of capacity utilisation in Europe and stabilisation of the US business in terms of both revenue and profit before the stock becomes attractive. Neither have yet materialised.”
Mr Hunter added: “While we agree with market sentiment that the new board and management of the company have the necessary skills and will provide the impetus to effect a turnaround of the company over time, we remain wary of that timescale and the bumps in the road that will be encountered in that journey.”