SHARES in the speciality baker Aryzta slumped more than 3pc yesterday as problems in its European operations weighed on the company overall.
For the 13 weeks to the end of April -- Aryzta's third quarter -- revenue excluding its holding in agronomy firm Origin Enterprises rose 10.8pc to €722.6m. Despite the strong top line, investors balked at the revelation that the group's Food Europe operation suffered an underlying fall of 2.6pc. Including acquisitions and currency movements, turnover from Europe jumped 6.7pc to €316m.
For the year so far the company has reported revenues of €2.1bn but European business is down 1.1pc.
"The Food Europe segment continues to be one of the most challenging trading environments, with both political and economic uncertainty continuing to dampen consumer confidence," the company said.
"Price increases over the past year, to cope with the significant raw material inflation, have presented an additional challenge, given the weak consumer sentiment in the region," the company added.
The Irish-led firm did not change its guidance for the full year. It is forecasting earnings per share of 338c.
Despite the struggles in Europe, Goodbody Stockbrokers' Liam Igoe remained positive on the company.
"Europe remains a challenge for the company because of the economic backdrop and also because there continues to be a volume impact on like-for-like (LFL) sales from the company's passing through of price increases.
"The picture was quite positive, however, in North America and the rest of the world. Food North America's LFL sales increased by 6pc -- lower than Q3, but ahead of our estimate."
Aryzta closed the day down 2.78pc in Dublin at €35.73.
Elsewhere in the food sector, there was good news for Kerry Group and Glanbia, who had their forecasts increased by Goodbody and Dolmen respectively.
Goodbody bumped Kerry's earnings per share estimate up 3pc to 262.1c on the back of currency gains from the euro's weakness while Dolmen upped its price target for Glanbia to €6.70 from €5.75 on what it said was the "growth of its nutritionals division"
Glanbia climbed 2.7pc to €5.75. Kerry lost 1.3pc to close at €33.91.