Aryzta shares drop on flat sales

Shares in Cuisine de France owner Aryzta fell by nearly 9% yesterday on the back of the group reporting flat quarterly underlying revenues and a fall in business in North America.

The Irish-Swiss firms ’s shares are down nearly 30% to date this year, with investors unhappy with earnings levels and investment decisions.

The Zurich-based group — formed by the 2008 merger of IAWS and Swiss bakery business Hiestand — said third quarter revenue, for the three months to the end of April, amounted to €975.2m. Currency movements meant this was up by 2.7% on a year-on-year basis but, on an underlying basis, there was no growth.

In Europe, Aryzta saw 4.3% annualised revenue growth to €436.9m, but in North America underlying revenues fell by 4.3% to €473.7m. Group underlying revenue for the first nine months of Aryzta’s current financial year was down by 1.1%, at €2.88bn.

No full-year performance guidance was given in the trading update due to Aryzta being in the midst of a significant executive and operational restructuring. Investor unrest led to the recent exodus of chief executive Owen Killian, chief financial officer Patrick McEniff, and head of American operations John Yamin.

Earlier this month, DAA boss Kevin Toland was named Aryzta’s new chief executive and US food industry veteran Jim Leighton has been appointed as a non-executive director. Mr Toland — previously a successful head of Glanbia’s US operations — is due to join after a six-month notice period or earlier if agreed.

Aryzta is also continuing to look at solutions for its controversial 49% stake in indebted French food retailer Picard, one of the investment decisions that upset investors. HSBC has been appointed as an adviser on “alternatives” for the investment.

“Work continues on this brief and the board will communicate any substantial change to the market as early as is practicably possible,” Aryzta said.

“While the recent appointment of a new CEO is positive and it is hoped the lead in time will be shortened by mutual consent, over the mid-term there could be further contract disruption in North America, the German facility may take longer than anticipated to ramp up production, the sale of the Picard stake will hinge on valuation, and new management might look to revisit growth assumptions.

"All could weigh on the stock in the coming months,” said Investec analyst Ian Hunter.