Aryzta shares surge after revenue bounce
Decline in sales 'moderating', says food giant
Published 30/11/2010 | 05:00
SHARES in the Irish-led food giant Aryzta surged yesterday after the company said first-quarter revenue had increased by nearly a third.
The company, which counts the Cuisine de France line of par-baked goods among its many brands, said revenue jumped by 33.2pc to €970.8m, although much of that was driven by acquisitions that closed during the quarter.
Aryzta closed the €335m buy-out of Maidstone Bakeries in Canada as well as a number of smaller deals during the three months to the end of October.
Outside of its subsidiary Origin Enterprises, which released an IMS last week, revenue was up more than 50pc at €632m. Underlying growth fell by 1.7pc year-on-year. That compared to a fall of more than 8pc over the same period last year. Sales in the UK and Ireland continued to fall but the decline was described as "moderating".
Aryzta did not provide details of their profits over the quarter but did say they were on course to increase earnings per share (EPS) by around 45c. That would imply expected EPS of some 289c over the full year. The EPS of 244c last year translated to an operating profit of €305m.
The US business was the main driver of growth during the quarter but the group's European operations saw revenue grow by 8.1pc. Again, acquisitions were mainly responsible. Underlying revenue declined by 2.4pc.
"Revenue decline in the UK and Ireland is moderating, reflecting the ongoing support to customers through value oriented innovation, investment in training and support, and execution enhancements," the company said in a statement.
The North America business saw revenue grow by 125.1pc due almost totally to acquisitions. Underlying revenue declined by 1.4pc.
The group said it has begun to combine its sweet baked goods business in the US, bringing the Spunkmeyer, Pennant Foods and Sweet Life companies together with the aim of developing a single national platform in the US.
"These are complementary businesses with shared cultures, products, capabilities, customer channels and relationships," the company added.
The market welcomed the statement, with shares up 7.41pc to €32.54 by late afternoon.
"While information disclosure is minimal, Aryzta appears to be coping with a difficult consumer and material cost environment for baked goods," said John O'Reilly of Davy stockbrokers.
NCB's Paul Meade said the update was as expected.
"The commentary is positive in terms of stability returning to the UK and Irish market and growth emerging in Europe," he said.