Global economic crisis hits Aryzta where it hurts

THE uncertainties in the global economy are reflected in the annual results of Aryzta with sales in its key geographic areas, Europe and north America, both down.

That weakness seemed to be the focus of investor attention yesterday as the share price was marked down by about 80 cent by mid-afternoon.

Even at €33.20 the shares have stood up well in the past two years, having ended 2008, the year of the merger between IAWS and Hiestand, at €25 a share.

In its IAWS days, the group enjoyed the distinction of being the best performing food stock internationally for a decade at one point in its history.

IAWS which drove the merger with Hiestand was unlucky that the deal was signed off on just before the global markets were about to implode.

The figures published yesterday still highlight the dominance of the European market within the enlarged group structure. However, the acquisition of Hiestand means the former IAWS Group now has global reach with developing markets stretching as far as Japan, Malaysia and Australia.

Back in August the group announced a deal to buy Tim Hortons’ 50% share of Maidstone Bakeries in Ontario, Canada, for €349m, to give it full control.

That business services the Tim Hortons quick service restaurant chain under a contractual arrangement which runs until 2016 at least and produces a wide range of products including handheld snacks, sandwich carriers and breakfast products.

Aryzta said the deal would enable it to speed up its manufacturing growth plans in North America.

At the same time it said its US subsidiary Fresh Start Bakeries was completing an investment in three bakeries in Asia – in Taiwan, Singapore and Malaysia and also announced it will start building a new bakery in Brazil. The cost of the investment was €36m, bringing it and the Maidstone investment to €385m.

Those investments should be investment enhancing within a year and demonstrate the group’s appetite to create a greater geographic spread of its operations at the earliest opportunity.

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