Sales fall 7.4pc in six-month period for bakery giant Aryzta
BAKERY giant Aryzta yesterday warned that the much-heralded global economic recovery has "yet to reach consumers" who are still adjusting their spending patterns "in response to tough economic conditions".
The commentary came as the Cuisine de France owner unveiled a 7.4pc fall in sales at its food division in the last six months of 2009.
Group-wide operating profit was down almost 5pc at €134m and Aryzta reaffirmed its full-year earnings guidance of 224c a share, implying a 4.5pc year-on-year fall. Commenting on the performance, Aryzta boss Owen Killian noted the enduringly tough consumer outlook facing Aryzta's retail customers across Europe, as well as the difficulties Aryzta's customers are having securing credit.
He stressed, however, that bakery offered "excellent food value for customers" and that recent debt bond sales in the US and Switzerland left Aryzta "well positioned within the fragmented bakery industry".
Those bond issuances have seen Aryzta's debt maturity extend to about 7.4 years.
The most recent financial period showed a €137.6m improvement in Aryzta's net debt, which was welcomed by analysts.
Formed from the 2008 merger of Dublin-based IAWS and Swiss group Heistand, Aryzta is one of the world's largest bakery groups with more than 8,000 staff working on the food side alone, in operations straddling Europe, the US and the emerging markets.
On the trading front, the last six-month period saw sales at Aryzta's 'Food Group' fall 7.4pc to €800.9m, while sales at agri-business subsidiary Origin fell 16pc to €593m.
Overall revenue at Swiss-quoted Aryzta AG was down 11.4pc at almost €1.4bn, broadly in line with expectations.
Within food, developing markets were the most resilient on the revenue front, posting a 26.3pc increase to €12.6m, while sales from Food North America dropped 7.9pc to almost €255m and Food Europe fell 7.7pc to €533.6m.
Food was also far stronger on the operating profit line, with earnings there falling just 1.1pc compared to a 41.5pc fall in half-year operating profits at Origin.
Food North America was leading the way on profits, with operating earnings improving by 2.8pc to almost €35.3m.
Goodbody's food analyst Liam Igoe attributed the strong food profits to "increased in- house production, substantial rationalisation in the UK and Ireland, as well as the synergies arising from the IAWS/ Heistand merger" and "increased efficiencies" in North America.
Davy's food analyst John O'Reilly, however, pointed to the difficulties in assessing Aryzta's performance since the company disclosed only "limited meaningful national, sector or category data".
"Other than observing that volumes in Ireland/UK may have fallen by 20pc, Aryzta parts with few trading or operational specifics," he added in a note to clients.
Mr O'Reilly went on to predict that revenue decline would "slow appreciably" in the second-half of the year given softer comparisons, but he stressed that "absolute decline may still occur".