The Swiss-Irish baked goods producer — which grew out of the 2008 merger between IAWS and its Swiss counterpart, Hiestand — yesterday reported a 5.5% increase in first half revenues (for the six months to the end of January) to €1.96bn and a 2% rise in underlying net profit to €141.1m.
However, underlying growth remains behind target and net income missed analyst consensus by 2%. The group’s share price was down by 9.77% at €44.
“Underlying revenue growth momentum continued to improve, although still 18-24 months behind prior expectations.
"Free cash flow was strong during the period, as anticipated, and remains the key business focus. Underlying net profit, from continuing operations, remains flat,” group chief executive, Owen Killian said.
He added: “Revenue development has been erratic for the past 12 months and will be for a further 18 months as we commission and optimise our capacity.
"During this period, customer insourcing in Europe and contract renewal in North America will negatively impact revenue by circa 3%, as previously indicated.”
Aryzta also owns brands such as Tim Horton’s and La Brea and is a significant supplier to the likes of McDonald’s and other big name consumer outlets.
Strong first half growth was seen in Europe, with revenues up 9.5%, but underlying sales dropped by 4% in North America.
Picard — the French food retailer Aryzta bought last year performed to expectations and is expected to be a source of good growth in time — but debt topped €1.8bn pushing the net debt-to-earnings ratio to 2.91 times, which remains a focus for analysts and investors.
Merrion Stockbrokers, which has a ‘hold’ tag on the Aryzta stock said in a note: “Management has guided that developments will be erratic for one-to-two years and that their focus is on longer term growth pattern.
"For us to move to a ‘Buy’ we would like to see profit margins stabilise and a significant further reduction in net debt. Progress has been made but more is needed.”
Aryzta said it should sustain underlying revenue growth for the remainder of the financial year but said margins are set to “remain under pressure”.