Contract renewals "subdue" revenue growth at Aryzta
The signing of long-term contract renewals slowed revenue growth at Swiss-Irish food firm Aryzta last year, its chief executive Owen Killian has claimed.
Excluding contract renewals revenue grew by 3.4pc last year with cash generation at the firm coming in ahead of target at €267m.
The increase in cash generation was due to a change in strategy where the company inverted capital allocation to focus on its cash generating potential.
"Underlying revenue growth has been subdued by the impact of contract renewals in North America during FY16. The cumulative effect of these contract renewals, combined with the long anticipated volume loss in Switzerland, will also negatively impact FY17," Mr Killian said.
The Cuisine de France owner commissioned €150m of new capacity and retired its older, less efficient assets.
During the year the firm's join ventures contributed €15.7m. Shares in the company have taken a hit since last year when it purchased a minority stake in French frozen retailer Picard.
"The attractive cash flow has provided an opportunity to retire relatively expensive long-term debt, which will reduce the cost of borrowing, as we enter a period of reducing debt. Lower interest costs will help maintain underlying fully diluted EPS a tconsensus levels in FY17," Mr Killian said.
Last week the company announced the appointment of Gary McCann as its new chairman.