Aryzta expects earning growth in double digits
FOOD sales at Swiss-Irish pastry producer Aryzta rose by 6.5pc in the last quarter as it reaped the benefits of new purchases.
In a trading update released yesterday, the company reiterated that it expects double digit earnings per share growth for the year, after sales into Europe jumped by nearly a fifth to €378m in its first quarter, the three months to October.
Most of this growth was generated by recent German acquisition Klemme. Aryzta agreed to pay €280m for Klemme earlier this year, its biggest purchase since 2010. The deal gives it access to a company with more than 2,500 bakery products and a big presence in German retailers Aldi and Lidl.
Growth in Europe helped to offset losses incurred by Irish company Origin, in which Aryzta is a majority shareholder. Origin's revenue decline of 12.6pc reduced overall group sales growth to 0.2pc.
Elsewhere, sales in the company's "rest of the world" division were hurt badly by currency swings. Despite underlying growth of 9pc, that division reported a 7pc decline thanks to negative currency movements.
North American sales were also hurt by currency swings, reporting a 1pc decline despite a small growth in underlying revenue.
Nevertheless, Goodbody stockbrokers said the results represented "a solid performance" -- despite the fact that underlying sales growth of 1.8pc fell slightly below its expectations.
It expects Aryzta to report an acceleration in like-for-like sales performance as the year progresses.
In the trading update, chief executive Owen Killen hinted heavily that the company is considering further acquisitions.
"The group is well placed to take advantage of potential consolidation opportunities across the sector," he said.
The company said it should complete its move to a new customer-centric business model by the end of this fiscal year. This three-year transformation, which in part seeks to integrate previously autonomous units, has been a major undertaking for the group. To date, it has spent €268m on the programme.