Revenues at Swiss-Irish food group Aryzta fell by 3.3 per cent in the first quarter on the back of contract renewal losses and a "subdued" European performance.
Earnings at the owner of Cuisine de France fell back to €962.3 million in the three months to October 31st 2016, as underlying revenue declined by 1.2 per cent.
Chief executive Owen Killian said the result is in line with expectations.
“The weaker underlying revenue development reflects the impact of expected contract renewal volume declines in North America, timing of new business listings, as well as a subdued European performance disrupted by consolidation of manufacturing activities in Germany. Aryzta remains focused on unlocking the underlying revenue development of its well invested assets and demonstrating its strong cash generating capacity. The material reduction in total group debt funding costs will provide EPS [earnings per share] support for FY17 [2017 fiscal year].”
Currency volatility
In Europe, the group reported a “solid” volume performance of an increase of 1.8 per cent, offset by a negative price/mix impact of 0.4 per cent, largely related to transactional currency volatility, Aryzta said.
In North America, where Aryzta operates the Otis Spunkmeyer brand, volumes fell by 5.7 per cent, driven by long-term contract renewal losses.
Across the rest of the world, underlying revenue growth was strong at 9.7 per cent, “due to continued success with key customers and channel expansion”.
Looking ahead, Aryzta said that its outlook for both” free cash generation and for underlying fully diluted EPS remains unchanged”.
