Thursday 27 June 2019

Would I take my Aryzta job now? Honestly, I don't know - McGann

Chairman says that turning the troubled baked goods company around will be a 'multi-year' effort

Education crisis: Third-level funding ‘the most serious issue of all’ for Ireland, said Aryzta chairman Gary McGann
Education crisis: Third-level funding ‘the most serious issue of all’ for Ireland, said Aryzta chairman Gary McGann
Ellie Donnelly

Ellie Donnelly

ARYZTA chairman Gary McGann said he doesn't know if he would have assumed the role of chairman at the baked goods company had he known how bad its problems were.

Mr McGann, a veteran of the Irish business scene with a career including years as chief executive of Aer Lingus and Smurfit Kappa, became chairman of Aryzta in 2016, and recently oversaw the raising of €800m from shareholders.

Speaking at day two of the Pendulum Summit in Dublin yesterday about taking the Arytza role, he said: "I'd like to think I'd be brave heart and go in but, honestly, I don't know."

Billions in shareholder value has been wiped out at Aryzta since Mr McGann was elected chairman at an agm in December 2016.

He inherited a difficult situation with the company having been in a negative spiral well before then. He brought in former DAA boss Kevin Toland as chief executive to implement a turnaround plan - which saw the controversial €800m fundraising narrowly approved by shareholders.

The funds were designed to make debt repayments, with an asset sales programme not delivering as much as the company would have liked. "There is still plenty of work to be done. It has been a muti-year problem and it will be a multi-year turnaround, but at least we have the basis for that now," he told the Irish Independent. "It is a business with a very strong history and there are some great people and some fantastic assets.

"The raw material is there and we have put a team together that are very committed and driven, but it's a challenge - that is no doubt."

Mr McGann is also Paddy Power Betfair chairman and insisted that the bookmaking industry was "clued into" the changes that are facing the sector amid increasing regulation.

"All businesses face challenges; in the world of PaddyPower Betfair the challenge is trying to understand what the regulator is trying to achieve, the context in which the regulation is put in place and to work with it, and certainly Paddy Power Betfair is very clued into that," he said.

"The only way to have a long-term sustainable business is to work within the norms and the standards that are required to be successful, and regulation is part of that."

Mr McGann also acknowledged the company's potential for expansion in the United States, where last year there was a relaxation of the gambling laws. "Certainly for the industry the US has huge potential, it has a sports-mad population… it means it's an enormous business opportunity. However, there are a lot of players and a lot of mouths to feed, and a lot of complexity."

Mr McGann, a former non-executive director at Anglo Irish Bank, said yesterday that he believes that governments are bad shareholders in a company from a management perspective.

"You don't know if they will be around in three or four years," he said, adding that this is too short a time frame and governments are regularly "held captive" by unions.

He said that Anglo's board could have used more "deep industry knowledge" of the banking sector.

On the outlook for the Irish economy, he warned that unless the funding model for third-level education is addressed, standards will decline.

"I find it a total paradox that we have among the best businesses in the world here... and we can't house people, we can't put hospital beds in for the ill and the aged, and we haven't a funding model for third-level education."

Irish Independent

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