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The Swiss-based company expects profits to track down by a similar amount for the full year. It blames the underperformance largely to North American weakness, adding to the already expected weakness in Europe as it commissions a new German bakery along with the impact of Brexit.
Revenues fell in North America. When coupled with higher than expected labour costs, margins were impacted which are now expected to be 6-7%.
The company also said that it has lost volumes related to a new branded strategy with a key brand (Otis Spunkmeyer) at its recently acquired Cloverhill facility. In 2014, it paid €730m ($1bn) for Pineridge and Cloverhill bakeries in a move Owen Killian, CEO said a the time, would “shift the company into more relevant convenience channels”.
On today’s announcement he said: “The performance in the current period is both unexpected and extremely disappointing. Cloverhill was acquired with the objective of unlocking the Otis Spunkmeyer brand into retail.”
Shareholders have also questioned the company’s decision to plough €446m into a 49% stake in high-end French frozen retailer Picard. Aryzta said in the statement the board was reviewing its investment strategy relating to joint ventures.
In December, Gary McGann, the former chief executive of Aer Lingus and Smurfit Kappa, was appointed chair to try steady the ship after a couple of years of poor performance. Last year it also offloaded its 68% share in Origin Enterprises.
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