Aryzta reports 1.5% rise in full-year revenue to €3.9 billion

Strong growth in Europe offset a decline in underlying revenue in the US

Aryzta chief executive Owen Killian with chief financial officer Patrick McEniff

Food group

Aryzta, owner of the Cuisine de France brand, has reported a 5.7 per cent drop in full-year earnings as revenue grew by 1.5 per cent to €3.88 billion, mainly due to a favourable currency impact of 1.4 per cent due to the stronger dollar.

The company reported earnings before interest, tax and amortisation (EBIT) of €484.9 million for the year ended July 31, down from €514 million a year earlier. Its margin declined to 12.5 per cent from 13.5 per cent but around half of this decline related to increased investment in its brands including La Brea Bakery, Hiestand, Otis Spunkmeyer and Cuisine de France.

Shares in Aryzta fell in early trading in Dublin but later recovered to stand marginally higher at €39.62 this afternoon.

Underlying revenue was up by 0.5 per cent, reflecting strong growth of four per cent in Europe, offset by a 3.1 per cent decline in underlying revenue in the US, due to the impact of long-term contract renewals, Aryzta said. The company said its joint ventures performed well, contributing €15.7 million.

"All long-term contracts have now been signed, which significantly increases revenue stability going forward," the company said.

It reported strong cash generation of €267 million, ahead of target, and said it expected cash generation in a range of €225 million to €275 million in the next financial year and also expected to deliver underlying earnings per share of 358 cent, in line with consensus.

Davy Stockbrokers said the company's free cash delivery was good but that Aryzta remained a "work in progress".

"While adjusted EPS was in line with forecast and free cash flow ahead, the operating model has yet to reach a point of stability, primarily led by margin development," the broker said.

The company said it completed the early redemption of all of its outstanding private placements, totalling €1.2 billion, since its year end. It exercised an option to increase its revolving credit facility to a total of €1.4 billion and signed a new €1 billion loan facility, all of which is expected to result in a significant reduction in the group's borrowing costs.

Aryzta also said it commissioned €150 million of new capacity and retired older, less efficient assets.

"Consumer demand for high-quality speciality food is increasing, whether out of home or through modern retail, focused on freshly-baked and prepared food, offering convenience and choice," Aryztachief executive Owen Killian said. "Aryzta is strategically well positioned to serve this increasing demand."

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