Acquisitions boost offsets bakery giant's unexpected sales decline
IRISH-SWISS bakery Aryzta saw flat sales growth over the past three months, though figures were buoyed by the group's acquisitions.
New financial results show that the group took in €1.2bn in the three months ending in April, which would have represented a 2pc decline but for acquisitions and currency movements.
Food sales, excluding those of subsidiary Origin, were up 3.6pc to €748.6m. Again, most of this growth was due to the completion of previously announced purchases like the company's takeover of Klemme, the German baker it bought for €280m earlier this year. The company said Klemme would "transform Aryzta's capability in Europe" when it closed the deal in February, adding 1,400 staff to its numbers.
Excluding acquisitions and currency swings, total food sales declined by 0.4pc. Dublin stockbrokers Goodbody said this was well behind its forecasts.
Aryzta is best known in Ireland for its Cuisine de France bread rolls but has substantial interests around the world. It supplies donuts to major Canadian coffee chain Tim Hortons and does business from the US to east Asia. The company's efforts to push through price increases in Europe saw underlying sales fall by nearly 2pc in that region. Klemme contributed 7pc worth of European sales group. Aryzta said Europe remained very challenging, "reflecting the weak macro consumer dynamics in the region and widening government austerity measures".
North American sales grew by 0.1pc, hit by the company's exit from the direct store distribution business in the US.
Excluding this, sales growth would have been 1.5pc. Two small US acquisitions helped to offset losses.
Food sales in the rest of the world were up by 0.9pc, hit hard by unfavourable currency movements which impacted growth by nearly 5pc.
Agri-food business Origin, in which Aryzta has a majority stake, has already reported results. Sales in the separately listed company declined by 5.2pc to €428m over the period.
Aryzta blames this on bad weather, that it is due to "the continued period of unseasonably wet and cold weather in the UK, which has resulted in lower winter crop plantings and delayed spring planting activity that has increased the seasonality of the Origin business".
Debts in the company's food operations stood at €884m at the end of January. Origin, whose debts Aryzta cannot ultimately be made liable for, had debts of €179m.
Ayzta says it will report earnings per share growth of 5pc to 7pc this year, as previously indicated. It expects to return to double-digit earnings per share growth in 2014.
Listed on the Irish stock exchange, it is one of the country's top three food companies alongside Glanbia and Kerry Group.
Its share price was up 2.5pc in early afternoon trading yesterday, to €45.30.