FDBusiness.com

ARYZTA, the global speciality bakery business, has reported a 2.1% decline in total revenue to €3.8 billion and a 31.1% drop in group EBITDA to €420.3 million for the year ended 31 July 2017. Based in Zurich, Switzerland, ARYZTA has operations in North America, South America, Europe, Asia, Australia and New Zealand. It has a primary listing on the SIX Swiss Exchange and a secondary listing on the ISE Irish Exchange.

Overall organic revenues decreased during the year by 2.1%, primarily related to an organic revenue decline of 6.3% in ARYZTA’s North American business, significantly related to volume declines with contract renewal customers and earlier than anticipated in-sourcing by co-pack customers. This decline in ARYZTA North America was partially offset by 1.4% organic revenue growth in ARYZTA Europe and strong organic growth of 7.2% in ARYZTA Rest of World.

Group EBITDA margins declined by 460bps to 11.1%. Within ARYZTA Europe, the margin decline was primarily due to the ramp-up of new bakery capacity in Germany, as well as the currency impact of Brexit on cross-border revenues and input costs in the UK. Significant butter price inflation also impacted results during the second half of the year. Within ARYZTA North America, margins were affected by reduced operating leverage, combined with increasing labour input costs and increased spend on branding and marketing costs.

The year was one of significant change for ARYZTA, which has made considerable progress in putting the core elements of the new leadership team in place. Kevin Toland has commenced in his role of Group CEO in September 2017 and Frederic Pflanz was named as Group CFO and will join in January 2018. Kevin Toland and Frederic Pflanz bring extensive expertise in the global food and consumer goods industries, as well as a proven track record of managing businesses undergoing significant transformation.

ARYZTA is committed to improving revenue growth by refocusing on its core strengths as a global leader in B2B Frozen Bakery and European Food Solutions, while continuing to deliver best-in-class customer service, support and food safety to customers. This revenue focus, when combined with bakery cost alignment, will support the financial aim of restoring operating leverage, improving EBITDA margins and enhancing cash generation.

ARYZTA has just completed a five-year €1.8 billion refinancing with a new net debt:EBITDA bank covenant ceiling of 4.75x agreed. The food group is committed to generating cash of up to €1.0 billion over the next four years, inclusive of asset realisations. The best current EBITDA estimate for the 2018 financial year is to be broadly in-line with FY17 given the range of internal and external challenges.