It’s been tough going at times but Aryzta CEO Kevin Toland will feel he’s finally got the ship pointed in the right direction. When he took charge in September 2017, Aryzta was a company in disarray. The business was overleveraged with too much debt and was bleeding customers, particularly in the US. The company’s share price had plunged more than 60% in previous years, from the dizzy heights of €70 in 2015/16 to just €25 in 2017. Yet worse was still to come.

Speaking recently with the Irish Farmers Journal, Toland makes no bones about the health of the company when he took charge.

“Aryzta has major operational challenges,” said Toland. “Those challenges have been deeper than anticipated and are taking longer to work through than we thought. But we’re making progress. When this business was created in 2007 it had a very strong B2B customer base. But it moved away from business to business (B2B) and started competing with its own customers,” he says. This shift was driven by the previous CEO Owen Killian, whose growth strategy for Aryzta was built on a massive acquisition pipeline year after year. In one year alone, Aryzta made an incredible 18 acquisitions as the company moved deeper into the business to consumer (B2C ) channel. Naturally, Aryzta’s customers cut business with the company when they found themselves competing with their own supplier.

“All of a sudden the very focussed and successful strategy that Aryzta was built on became a lot broader. Since I’ve taken the helm, the strategy has been to refocus Aryzta back into B2B frozen bakery, where almost 90% of our business comes from,” said Toland.

The turnaround has been slow to materialise. Since Toland took charge in 2017, Aryzta’s share price only fell further, while the US business has continued to bleed customers. However, Toland will feel the company reached a turning point after 53% of Aryzta shareholders narrowly approved an €800m capital raise in November that will be used to fund a multi-year turnaround plan.

“Net of costs, €740m has been raised, which we are using to stabilise the business and the balance sheet. We’ve a quality customer base that’s been very sticky despite the challenges the business has faced,” said Toland. Toland will be further encouraged by the half-year results posted this week by Aryzta, which hint at the first signs of a recovery in the underlying US business. The results show that profit margins in Aryzta’s north American unit expanded by 40 basis points year-on-year to 6.8% – the first margin expansion in the US business since 2014.

However, sales in the north American business posted a 1.8% decline to €718m for the period, which was mainly a result of a 2% drop in sales volumes. Overall, Aryzta reported group sales of €1.7bn for the six-month period to the end of January 2019, reflecting organic sales growth of 0.7%. If the stabilisation of the US business can be sustained, and Toland continues to refocus the business on its frozen B2B core, Aryzta could be at the start of a comeback.