Aryzta posts €908m loss as new CEO eyes asset sales
Troubled baked goods group reveals Brexit added to woes
Embattled Swiss-Irish baked goods firm Aryzta will dispose of assets over the next four years, as new chief executive Kevin Toland set out a strategy for stabilising the troubled group.
Just two weeks into the job, Mr Toland - the former boss of the DAA - has already toured Aryzta operations in the United States, its most troubled territory, in order to assess the extent of the work required to turn the group around.
Releasing full-year results yesterday, Aryzta said that sales fell 2.1pc to €3.79bn in the period, while group earnings before interest, tax and amortisation tumbled almost 43pc to €259m.
Underlying net profit was also down by almost 43pc, at €179m.
The Cuisine de France owner made a pre-tax loss of €1bn, after taking a non-cash €860m charge related to the write-down of assets in the United States.
It made €120m pre-tax profit the year before. Its reported net loss was €908m.
The results showed that Aryzta's revenue in Europe fell by 0.5pc to €1.74bn, but it also recorded 1.4pc organic growth there.
In North America, sales tumbled 5.7pc to €1.8bn, while organic revenue was down 6.3pc.
In the rest of the world, Aryzta revenue was 15.8pc higher at €259m, and it recorded 7.2pc organic growth in that division.
The group also announced yesterday that it has refinanced €1.8bn in debt, agreeing new five-year revolving, unsecured bank facilities underwritten by Bank of America Merrill Lynch, HSBC, Rabobank and UBS.
Aryzta said that its earnings before interest, tax, depreciation and amortisation (EBITDA) margins declined 460 basis points to 11.1pc for the full year.
At its European unit, the margin decline was primarily due to the ramp-up of new bakery capacity in Germany, it said, as well as the currency impact of Brexit on cross-Border revenues and input costs in the UK. It added that significant butter price inflation also impacted results during the second half of the year.
Mr Toland told investors yesterday that a new strategic direction for the group has now been determined.
That will see the group refocus on its core business-to-business bakery and European food solutions business.
In a presentation to analysts and shareholders, Aryzta said that it would not build business-to-consumer brands and "target deleverage of balance sheet through cash generation and asset realisations over four years".
It added that it would focus on "costs, capacity utilisation and efficiencies" and target cash generation in 2018.
Aryzta, which has its roots in Irish agri group IAWS, has had a torrid couple of years.
Four key executives, including former Aryzta CEO Owen Killian, left the company this year as it struggled amid profit warnings and investor unease.
In its annual results yesterday, Aryzta said it paid a total of almost €10.4m in relation to the "remaining contractual employment period and the 12-month post-contractual term non-compete agreements" for four executives who departed.