Aryzta is Poised For Growth
Aryzta, the Zurich-based speciality bakery group, has reported a 7.1% rise in group EBITA to Eur475.6 million on revenue up 7.0% to Eur4.50 billion for the financial year ended 31 July 2013. The group’s core Food Group increased revenue by 7.6% to Eur3.086 billion and EBITA by 8.5% to Eur406.7 million.
Aryzta has speciality bakery operations in North America, South America, Europe, Asia, Australia andNew Zealand. The group has a primary listing on the SIX Swiss Exchange and a secondary listing on the ISE Irish Exchange. Aryzta is the majority shareholder (68.6%) in Origin Enterprises, a Eur1.42 billion turnover agri-services business, which has a listing on the AIM in London and the ESM in Dublin.
Aryzta is two-thirds of the way through its ATI programme, a three year plan focused on supply chain optimisation and ERP implementation at across its bakery businesses, which are divided into three regions – Europe, North America and Rest of World. Critical to this initiative is the development of a customer centric strategy, with highly effective cross-functional teams, to replace the previous business model of autonomous business units. The customer centric model has already been deployed in North America and its now being replicated in Europe.
Aryzta’s European food business grew revenue grew by 9.3% to Eur1.4 billion during the year. This was largely driven by a very strong contribution of 9.0% from acquisitions. Underlying revenues grew marginally at 0.2% over the year, with a strong recovery during the fourth quarter of 2013. The weak underlying growth in bake-off reflects sustained weak consumer spending and the growing impact of government austerity measures across the region. The impact from currency movements was negligible during the year.
The acquisition of Klemme, the German frozen bakery specialist, significantly transformed Aryzta’s presence in the pan-European large retail segment. Klemme enables Aryzta to target the high growth In Store Bake-off (‘ISB’) for large retail customers, as consumers seek greater bake-off choice for home consumption.
Food Europe EBITA increased by 9.7% to Eur186.0 million, while EBITA margins expanded by 10bps to 13.4%. Significant ATI-related and expansion-related capital investment was completed inEuropein FY 2013. The total cash costs relating to non-recurring items were Eur44.5 million, while Eur44.0 million was invested in the roll-out of the European ERP system and optimisation-related capital investments. These investments were key to establishment of a European customer centric business model and to rebalancing the channel mix within Europe. Additional expansion-related capital investments, primarily for further bakery capacity inPolandthat is in the final commissioning stages, amounted to Eur63.8 million.
Food North America revenue grew by 6.4% to Eur1.5 billion, with acquisition contribution of 2.8% and underlying revenue growth of 1.6%. Food North America EBITA grew by 7.9% to Eur190.3 million, due to positive underlying revenue growth and further margin expansion of 20bps to 13.0% during the year.
Owen Killian, chief executive of Aryzta, comments: “Revenue growth and margin expansion performance was robust in FY 2013, given the level of change management achieved across the business. Underlying revenue growth remained positive, and the improved diversification of our channel mix should improve the sustainability of this growth.”
He continues: “FY 2013 marks five years since the creation of Aryzta AG, with Food Group revenue growth of 89% to Eur3.1 billion, Food EBITA growth of 134% to Eur407 million and consolidated underlying fully diluted EPS growth of 78%, achieved in a period challenged by prolonged consumer recession and highly volatile food inflation. Aryzta has emerged financially strong and poised for growth as it completes the final year of transformation into a customer centric group, focused on consumer trends and individual customer requirements.”
Aryzta’s quest to become the partner of choice in speciality bake-off through leadership in innovation excellence is well established in North America and well underway in Europe. In Rest of World, the focus remains on adding new capacity.
