Aryzta shares plummet as revenues fall by 20pc
Shares in Swiss-Irish food maker Aryzta have plummeted after the company issued a profit warning about an expected drop in revenues of 20pc this year.
Shares in the company dropped by 31pc on the back of the announcement.
Commenting on the announcement the CEO, Owen Killian, said: “The performance in the current period is both unexpected and extremely disappointing."
The figures are for the last five months of 2016 and, in a statement, the company said that the impact of Brexit, reduced revenue in the US and higher than expected labour inflation costs had impacted across the business.
In 2014 Aryzta spent $1bn (€730m) on US and Canadian acquisitions, including the US company Cloverhill bakery.
At the time Aryzta said the acquisitions would allow it increase its presence in the pastry consumer market in North America.
Aryzta reported 34pc of its North American revenue as branded as of July 2016 and its strategy is to grow this further.
However, its says that its US baked goods distribution company Otis Spunkmeyer’s branded strategy has triggered co-pack volume losses earlier than anticipated. “This resulted in significant negative operating leverage at the Cloverhill facility.”
It also says that higher than expected labour inflation costs in North America means under recovery of costs and lower H1 margins, which are now expected to be 6-7%. However, it says that North American margins are expected to improve in H2, as agreed price increases take effect with the majority of customers.
Aryzta also announced that the Board is reviewing its investment strategy as it relates to its joint ventures.
Killian also said it will take a recovery followed by a period of sustainable growth to re-establish investor confidence.
"We have initiated price increases to address United States labour inflation, which is significant across the business
“It will also require an alignment with our key shareholders in terms of our future strategy and capital allocation. A substantial element of this significant setback is timing related. The ARYZTA Board and management teams are committed to returning the business to solid performance and growth and dealing with the challenges presented.”