After a rough week, floundering Aryzta is still in choppy waters
Aryzta chief executive Owen Killian will no doubt be licking his wounds this weekend.
The boss of the Swiss-Irish food giant tendered his resignation this week, with his chief financial officer also heading for the door following a dismal couple of years for Aryzta.
And while hardly a silver lining, Killian's own Aryzta shares increased significantly in value in recent days.
On Friday last week, his 216,530 Aryzta shares were worth as much as 6.4 million Swiss francs (€6m). Yesterday they were worth 7.04 million francs (€6.6m), boosted by the reaction to the planned departures.
Shares in the company rose more than 20pc last Tuesday after the sweeping changes at the firm were unveiled.
Killian was forced to sell €16m worth of shares in the group last year, ditching the more than 426,000 shares at about 44.70 Swiss francs apiece. Mr Killian had to sell the stock because the weakness in the share price even then had impacted the collateral value of holding.
The blame for the lacklustre financial performance of the company, which has its roots in the Irish Agricultural Wholesalers Society (IAWS), has been laid squarely at the senior executives' feet, after they pursued the maligned €446m acquisition in 2015 of a 49pc stake in French frozen food company Picard.
That has been compounded by difficulties in North America, and Europe generally.
Aside from the executive changes, chairman Gary McGann has initiated a review of Aryzta's investment strategy in joint ventures.
It seems almost certain that the Picard stake will be sold.
The tumult has also raised the prospect of whether or not Aryzta could itself become a takeover target.
But analyst Ian Hunter at Investec thinks it's unlikely.
He points out that Aryzta has a market capitalisation of €2.7bn and an enterprise value - which includes debt - of €4.4bn. "It is a niche player," he said. "It does have very good contracts and does have very good clients (Subway and McDonald's among them) which international players would no doubt be happy to step in to.
"The difficulty at the moment though is Aryzta's debt levels," added Hunter.
"You're dealing with a business that throws off cash, but the top line growth is falling, margins are under pressure and you have a net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) ratio of 3.3 times, with management saying they have renegotiated their headroom to four times.
"The implication is that profits are going to be even weaker than we have pencilled into our numbers right now."
He said it's "difficult" to see Aryzta being sold to another public company.
"It could be an ideal candidate for private capital if they have that amount of money," said Hunter.
Meanwhile, he pointed out that Aryzta wasn't as strong as it used to be.
It also has idle capacity at its plants, while a power vacuum at the top creates additional uncertainty.
"There are three things to deal with: the underlying business, Picard, and debt.
"Management would have to be congratulated for everything they did from about 2010 to the middle of 2014," Hunter said.
Aryzta got a very good business positioning through "judicious acquisitions" that were integrated well. "They had a business that was growing stronger than the market and was at much higher margins than the market. They did that part well," said Hunter.
But he cautioned that it doesn't take much to clip margins if you've got either idle machinery and a labour force maintaining that.
"You've got the cost base still there and the revenue coming off and it probably doesn't take much to upset the balance, and that, to some extent, is what's happened."