The Swiss based company which owns the Cuisine de France brand saw a sharp fall in its profits across its core markets for the six months to the end of January as revenues and underlying business continued to fall. Group profits (EBITA) for the six months collapsed 31% to €158m, while margins tightened from 11.8% to 8.3%.

Half year revenues declined 2.8% to €1.9bn, which was led by a 5.8% decline in its American business and a 2.3% fall in its European business. A 20% increase in sales to reach €129m in other regions was unable to offset the declines in its main markets. Disposals, net of acquisitions, reduced revenue by 1.6% while underlying revenue decreased a further 1.6% during the period.

North America

North America which accounts for 48% of the business with revenues of €915m, saw underlying revenues decline by 5.2%. This decline was mainly due to the volume losses associated with long-term contract renewal losses, together with revenue losses from accelerated in-sourcing by co-pack customers.

There was a further decline of 1.7% (underlying revenues) from the disposal of a non-core filling and mixes business.

Profits decreased 42% to €65m, while margins shrunk from 11.7% to 7.2% as a result of reduced revenues, leading to reduced operating leverage. The performance was not helped by increased labour cost pressures and continuing investment in its own brands. Aryzta has continued to invest in the roll-out of its Otis Spunkmeyer (a branded snack cake).

Europe

Its European business saw revenues fall 2.3% to €862m. There was 1% underlying growth in its European business, despite disposal of a business in France and currency headwinds, due to the weakening of Sterling against the Euro. The growth was driven by its businesses in Central and Eastern Europe and the Netherlands, offset by some declines in Germany due to delays in factory commissioning.

European profits fell by 25.9% to €78m while margins decreased from 12% to 9.1% as a result of a slower ramp up of the new bakery in Germany along with weakened sterling.

Rest of World

Other regions saw underlying growth of 9.5%, helped by a favourable currency impact of 10.8%, arising from the appreciation of the Brazilian real and the Australian dollar. Profits increased by 21.4% to €15m, while margins increased from 11.5% to 11.6%.

Joint ventures

Aryzta holds a 49% interest in Picard, a premium frozen food retailer in France. Aryzta is currently reviewing its investment in Picard with Lion Capital. The group also owns a 50% interest in Signature Flatbreads.

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