Analysts generally impressed by group’s results

ANALYSTS were generally impressed with Aryzta’s first half performance that was slightly better than they expected.

The company operates in what could be termed the discretionary end of the consumer food market, where par-baked rolls, savoury finger food, cakes and artisan breads become a lower priority when incomes fall.

Its food operations cover Europe and North America with Japan, Australia and Malaysia key growth markets currently under development.

The breakdown of the figures show developing markets achieved a 126% growth in operating profits, from a small base, to more than €2 million.

Europe dipped by over 5% while in the US operating profits rose 2.8%.

At more than €60m, Europe is by far the largest market in the group, with the US in second place with operating profits of over €35m.

In August 2008, the group floated in Zurich and Dublin at a price of €34 a share and they went to €28.80 in Dublin as the group stood by its earnings forecast of 224c per share for a full year.

While the market reaction was mainly positive, with NCB recommending the shares as “buy”, Davy’s John O’Reilly has remained “neutral”.

He criticised the lack of detail accompanying the figures, stating: “What we may ultimately need to be assured of is that, in the absence of a consumer recovery, Aryzta can strategise for top-line growth in what is a huge baked goods sector.”

Limited meaningful national, sector or category data make it difficult to assess how well the company performed when underlying revenue declined by 7.6%, he said.

“Other than observing that volume in Ireland/UK may have fallen by 20%, Aryzta parts with few trading or operational specifics.”

Paul Meade of NCB said he was maintaining his buy recommendations for the group. Solid margin performance offset weaker sales and “we see the H1 results as very solid and ahead of expectations given the challenging retail environment... we continue to rate the stock a buy.”