Aryzta targets 'fair value' after overpaying for stake in Picard
Embattled Swiss-Irish baked goods group Aryzta is still waiting for the ideal opportunity to ditch its stake in French food company Picard, having decided almost a year ago to evaluate options for the business, according to new Aryzta CEO Kevin Toland.
Widely regarded by analysts as a misstep for Aryzta, the Cuisine de France owner acquired a 49pc stake in Picard, which makes frozen goods, for €446m in 2015. As part of a sweeping review of the group initiated by Aryzta chairman Gary McGann, the Picard stake was earmarked for a possible sale. Lion Capital owns the remaining 51pc.
Mr Toland told analysts yesterday as Aryzta released a trading update that there is "no new news on Picard".
"We clearly overpaid for our stake when we bought," added Mr Toland, who only took up the new role in September.
"We would clearly indicate it in our strategy and previous to that, that we would like to exit. But we'll wait and see for an opportunity to do that at fair value.
"And in the meantime, we will remain very active in the business in terms of making sure that the business is performing, which it is."
Aryzta, which holds its AGM next week, said that its first-quarter revenues fell 5.5pc to €909.7m, with underlying revenue declining 2.6pc and foreign exchange fluctuations accounting the remaining fall.
Its European arm returned to growth, while its business in North America grew 1pc on an underlying basis, excluding its Cloverhill operation. That was the first time in 12 quarters that the North America business posted a positive underlying performance.
On a reported basis, revenue in North America was down 7pc. But the better underlying data propelled Aryzta's shares more than 4pc higher in Dublin and 5pc higher in Zurich.
Aryzta's Cloverhill production facilities have been hammered since an immigration crackdown earlier this year saw 800 workers leave the sites. That was more than one-third of the Cloverhill workforce. The departures played havoc with Aryzta's production in the US.
The Irish Independent revealed last week that one former Aryzta customer, Tennessee-based McKee Foods, has sued Aryzta for lost production, claiming it will lose millions of dollars in profits as a result of Aryzta being unable to fulfil its contract.
"In terms of Cloverhill, we had a very specific, unique labour challenge where we turned over almost 35pc to 37pc of the workforce over a short period of time," said Mr Toland yesterday.
"It's proceeding very, very slowly because it's like a brand-new factory and a brand-new workforce where you're just trying to embed all that in and settle it all in."
He declined to comment on the action by McKee Foods.
"We'll make absolutely no comment at this point given that we have had a legal case served on us and we're at the very, very early stages of that," said Mr Toland, the former head of Glanbia's US business and also the ex-DAA CEO.
"So, we'll give a further update in due course. [It] just wouldn't be appropriate to say anything at all at this point.
"It may prejudice our position."
Aryzta expects earnings before interest, tax, depreciation and amortisation to be broadly in line with the previous year's €430.3m.