Shares in Aryzta up on strong update
Shares in Swiss-Irish food firm Aryzta rose by almost 8pc at one point yesterday after announcing it grew its first quarter revenue to just under €1bn.
Total turnover at the group was up 6.1pc to €995m in the 13-week period to the end of October which marks the first quarter of the company's 2016 financial year.
Although there was negative underlying growth of 0.4pc, this was more than offset by boosts from acquisitions and favourable currency movements.
This was also a significant improvement on the previous quarter, when underlying revenue fell by 4.3pc.
Aryzta also reiterated its earnings per share guidance for the 2016 financial year, which is expected to be in the range of 365-385 cents.
The company, known in Ireland for its Cuisine de France brand, said its operations in the UK and Ireland returned to growth during the period. The European arm recorded underlying growth of 5.5pc during the quarter while revenue grew to 9.5pc, boosted by acquisitions.
Aryzta's North American arm, which has been struggling since the end of 2014, recorded a contraction of 5.6pc in underlying revenue, although this was a slight improvement over the previous quarter. However, total revenue still rose by 5.2pc to just over €500m, mainly due to a favourable exchange rate.
At the group's Rest of The World division there was underlying revenue growth of 2.2pc, but a negative currency impact meant that overall turnover fell by 10pc to €52.4m.
Chief executive Owen Killian said that the company's underlying revenue performance was "satisfactory" in the quarter.
He added that Aryzta's North American business is "still digesting the impact" of a capacity optimisation programme launched a year ago but added consumers are responding well to the company's branding efforts in the market. However, he noted that consumer sentiment is "more muted in Europe".
Analysts gave a cautious welcome to the update. Goodbody Stockbrokers analyst Liam Igoe held his "Buy" rating on the stock and said Goodbody expects full year EPS at the higher end of the flagged 365-385 cents range. He said: "[This is] partly due to currency assumptions and we do not foresee making material changes to our forecasts at this stage. We remain positive on the stock."
The positive reaction to the update will come as a relief for management, which has seen the company's share price fall by more than a third from over €73 since the start of the year. This has been due to tough trading conditions, which saw its profits drop in its most recent quarter, and an unfavourable reaction from analysts to its acquisition of a 49pc stake in French frozen retailer Picard. Aryzta shares, which were up almost 8pc in early morning trading on the Irish Stock Exchange yesterday, closed at €44.40, up 5.8pc.