Aryzta shares fall sharply after profits dip in half year results
Published 15/03/2016 | 02:30
Shares in Swiss-Irish food firm Aryzta plummeted by as much as 10.25pc yesterday after the company published financial results for the six months ending on January 31.
The company reported an increase in its cash generation of €146.9m to €173m for the first half of its financial year.
"I think the second half of the year tends to be a stronger period for the company. Based on the trading update I would expect the company to deliver a better second half," Merrion Stockbrokers' Darren McKinley said.
Arytza shares were down to €43.62 at 1pm yesterday from €48.72 on Friday.
Aryzta cut capital spending from €172.1m to €68.8m year on year.
Net debt to earnings before interest tax and amortisation (EBITA) increased to 2.9 times, up from 2.54 times.
Mr McKinley said the dip in profitability was behind yesterday's selling.
"Profit margins contracted by 30 basis points across the board having contracted by 20 basis points last year. Expectations were that margins would maybe improve and in fact they've gotten worse," he said.
Aryzta's revenues increased by 5.5pc to €1.96bn, while EBITA rose 2.7pc to €230.8m.
European food revenues rose 9.5pc to €881.7m but after stripping out currency exchange rates were up 4.7pc. North American revenue dropped by 4pc to €971m.
Associates and joint ventures performed in line with company expectations, contributing €13.7m.
Aryzta chief executive Owen Killian said that revenue development over the last year had been "erratic" and will continue to be so over the next 18 months.
"During this period, customer insourcing in Europe and contract renewal in North America will negatively impact revenue by around 3pc," he said.
Aryzta shares fell significantly in 2015 from €73 in March to around €44 in December.