Profit warning sees €1.2bn wiped from Aryzta value
The slump followed the publication of another underwhelming trading update from the baked goods group, in which management warned first half earnings will be around 20% down on a year-on-year basis.
Aryzta’s financial year runs to the end of July. While the Brexit vote and operational difficulties in mainland Europe have blighted the first five months of the year, the real underperfomance has stemmed from the North American operations, where revenue has fallen and labour inflation costs have been higher than expected.
Planned synergies between the Cloverhill Bakery subsidiary in the US – which was bought in 2014 - and Aryzta’s Otis Spunkmeyer brand have not materialised.
“The performance in the current period is both unexpected and extremely disappointing,” Aryzta chief executive Owen Killian said.
“We know it will take a recovery followed by a period of growth to re-establish investor confidence. It will also require an alignment with our key shareholders in terms of our future strategy and capital allocation,” he said, adding the board and management is committed to returning the business to “solid performance and growth”.
Aryzta’s share price, already down by over 50% in the past year and a half, yesterday plunged by 32% from €42.18 to €28.50, cutting the group’s market value by €1.2bn to €2.53bn.
Davy Stockbrokers yesterday revised its full-year underlying revenue guidance, for Aryzta, from a 1%-2% growth range to one of a 2% drop to a 1% increase.
