Aryzta keen for role in mergers

Owen Killian: Management confident of earnings

Irish-Swiss bakery group Aryzta has hinted it will likely play a part in any upcoming anticipated growth in consolidation within its sector.

The Zurich-based group — established through the 2008 merger between IAWS and Swiss group Hiestand — yesterday reported total group revenue of just over €1.1bn for the three months to the end of October, the first quarter of its current financial year.

That figure was up by 0.4% on the same period last year but, stripping out its majority interest in Dublin-based agri-services group Origin Enterprises, Aryzta’s total food revenue rose by 6.5% on a year-on-year basis to €796.3m.

While a figure of €364.2m represented a marginal annualised drop of 0.9% at the group’s North American operations, its Food Europe division enjoyed a near 18% year-on-year revenue jump to €377.6m, which was largely helped by the €280m acquisition of German bakery business Klemme earlier this year. Revenues from the rest of the world operations fell by over 7% to €54.5m.

“The food group remains on track to substantially complete its transformation programme by the end of full-year 2014 [the end of next July], and the group is well-placed to take advantage of potential consolidation opportunities across the sector,” said chief executive Owen Killian yesterday.

Mr Killian added that management remains confident of Aryzta achieving double-digit fully-diluted earnings per share for the current financial year, in line with the range guided in September.

Cathal Kenny of Davy Stockbrokers, which retains an ‘outperform’ rating on Aryzta, called yesterday’s update “solid”, considering full-year guidance being reiterated and the strong showing from the European operations.

“Aryzta, through its change programme, is laying the foundations for the next phase of development while, ultimately, creating a more sustainable business model,” said Mr Kenny.

He added that, with improving customer alignment, financial flexibility and an extensive self-help programme, Aryzta is “well-placed to deliver earnings growth off a higher returns base over the coming years”.

Aryzta’s share price was down slightly in Dublin trading yesterday at just under €55.


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