Aryzta food group reports ‘flat’ half-year earnings

FOOD group Aryzta, formed out of IAWS and Swiss bakery group Hiestand, has reported flat earnings for the first half of the current year.

The figures were slightly better than market expectations, and the shares were up by 2.1% to €28.75 by the close.

Aryzta’s food business reported sales of €800.9 million for the six months to the end of January, a fall of 7.4%.

Operating profits were €106.5m, with underlying net profit growth of 1.1% of €73.8m achieved.

Pre-tax profits at the food division, which includes Cuisine de France, Otis Spunkmeyer and La Brea artisan breads, totalled €90.6m.

Origin, the group’s agri-nutrition subsidiary, last week reported a 16% reversal in its sales to €593m and a 41% decline in operating profits to €15.9m, reflecting the tough environment for agriculture in its core markets.

Aryzta achieved total sales of €1.57 billion and pre-tax profits of €109m.

Commenting on the results, Owen Killian, chief executive, said “the global economic recovery has yet to reach consumers who continue to adjust their patterns of spending in response to tough economic conditions.”

In the current climate, “credit availability remains difficult for many customers” now being constrained in their efforts to maintain and develop their consumer investment programme, he said.

“Those customers who have adapted to the conditions and who offer a satisfying consumer experience by using ‘freshly baked’ throughout the day… demonstrate the resilience of the business,” he said.

Consumers continued to switch channels during the period with the food service end of the business hit harder than the retail business segment, he said.

Aryzta said it aims to develop customer relationships and delivery channels so as to enhance the consumer experience.

“The group has optimised its capital structure over the period through accessing the Swiss bond and US private placement markets. As a result, Aryzta’s debt maturity has been extended to 7.4 years, leaving it well positioned within the fragmented speciality bakery industry.

“The group continues to focus on cash generation and operating efficiencies, and confirms existing guidance on underlying EPS of 224 cent for full year, 2010.”

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