Specialist baker learns why you don't surprise the market
If you start your day with a coffee and doughnut from a Topaz petrol station, follow it with a ham and cheese roll out of Spar or Centra, and end your day by getting a burger at McDonald's, there is a good chance you are an Aryzta customer.
The speciality baker now supplies goods as diverse as doughnuts and burger buns to some of the biggest companies in the world. It has had few problems growing into the multibillion euro business it is now, but yesterday was, on paper at least, the worst one for the company in years.
Full-year profits of €291m and turnover of €4.2bn are well and good, but the problem was the reduced profit forecasts for 2013 from 18pc growth to between 5pc and 10pc.
Most public companies rigidly follow the rule of 'don't surprise the market' and it is a wise one. Traders don't react well to surprises and it usually shows in the company share price. Aryzta was no exception, falling as much as 8pc at one stage yesterday.
Sometimes you have to let the markets down, though. Up to yesterday, Owen Killian and his team have doggedly hung on to an earnings-per-share target of €4 per share by the end of 2013.
That target was put in place in 2007, at the peak of the boom; now we are in the depths of a five-year-long downturn and consumer spending is showing no sign of a recovery.
Add in higher input costs because of a bad wheat harvest in the US, and you have the perfect storm for an earnings downgrade.
Aryzta is still a strong company, and yesterday the firm was emphasising that the €4 target hadn't been dropped but was merely delayed. Whether it can reach that target without further acquisitions, though, is open to question.