Food group Aryzta upbeat despite 8% decline in annual profits

Shares in Irish-Swiss baked foods group Aryzta fell by nearly 2% yesterday on the back of a significant fall in annual profits and management suggesting volume declines and contract renewals will negatively impact its 2017 earnings capability.

The group, formed by the 2008 merger between IAWS and Switzerland’s Hiestand, yesterday reported pre-tax profits of €365.5m for the 12 months to the end of July; down by 8.2% on the previous year’s total.

Group revenue was up by 1.5%, however, to just under €3.9bn thanks to favourable exchange rates.

Underlying revenue growth was subdued by the impact of contract renewals in North America during the year, and chief executive Owen Killian said there will also be a negative impact in the current year. He added that Aryzta remains well-positioned to serve the increasing demand for high-quality speciality food.

“The attractive cash flow [Aryzta’s generated €267m in cash during the year, which was ahead of schedule] has provided an opportunity to retire relatively expensive long-term debt, which will reduce the cost of borrowing as we enter a period of reducing debt,” he said.

Aryzta also said that it remains confident of meeting its 2017 earnings guidance of 358c per share.

“Lower interest costs will help maintain underlying fully-diluted earnings per share at consensus levels in fiscal year 2017,” according to Mr Killian.

Aryzta’s Dublin share price dipped to €38.98 at close of trading yesterday.