Monday 22 October 2018

Aryzta hit as €1bn is wiped off market cap

Former DAA boss Kevin Toland took over as chief executive of Aryzta last September
Former DAA boss Kevin Toland took over as chief executive of Aryzta last September
John Mulligan

John Mulligan

Another share slide at embattled Swiss-Irish baked goods firm Aryzta yesterday has seen as much as €1bn wiped off its market capitalisation following its latest profit warning.

The Cuisine de France owner's shares were as much as 12pc lower in Zurich yesterday, following a more than 20pc slump on Thursday.

The latest decline pushed the shares to a more than a year low, even lower than they were following a profit warning issued by the group in January last year. Its market capitalisation is now just over €2bn.

Yesterday's continuing run on the shares was sparked by downgrades by analysts at firms including Kepler Cheuvreux, Societe Generale and Mirabaud.

Kepler Cheuvreux analyst John Cox said the latest profit warning from the group was "particularly painful" for the new executive team.

Former DAA boss Kevin Toland took over as chief executive of Aryzta last September, charged with leading a multi-year mission to turn the company's fortunes around.

The former Glanbia executive has drafted in a new team to lead the business, including a former Kraft executive, as well as a former senior colleague from the DAA, which operates Dublin and Cork airports.

The group has set a four-year target of achieving a €1bn deleveraging programme, which will include the sale of non-core assets including its 49pc stake in French food firm Picard, as well as its Cloverhill business in the United States.

Aryzta expects to generate €450m from the sale of non-core assets by the end of July.

Societe Generale has reduced its rating on Aryzta shares to 'sell'.

The latest profit warning will heap pressure on the management team to deliver results.

Aryzta said on Thursday that its earnings before interest, tax, depreciation and amortisation (EBITDA) in the 12 months to the end of July, excluding currency movements and disposals, are now likely to be 15pc below the €420m reported in the previous financial year. The figure will be 20pc lower on a reported basis. It had expected the current year's number to be broadly in line with that of 2017.

It noted that EBITDA weakened in the three months to the end of December in both Europe and the United States "with this trend not expected to reverse for the remainder of full-year 2018".

Mr Toland said this week that Aryzta's revamped senior executive team is "fully focused" on meeting the challenges facing the business.

"We are progressing the disposal of non-core assets and deleveraging programme which is a key component of our multi-year turnaround programme and delivery of the €1bn cash generation target," he said.

Irish Independent

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