Aryzta chief executive Kevin Toland has announced a €200m cost-cutting programme set over three years in a bid to revive the financial fortunes of the speciality bakery giant.

Toland said the restructuring and cost-cutting programme is aimed at restoring “financial flexibility” in the business, as well as aligning Aryzta’s asset and cost base with current business conditions.

The new cost-cutting plan is a response to continued margin weakness in the business. Aryzta management has said earning (EBITDA) margins are "below expectations".

Toland unveiled the new cost-cutting plan as Aryzta announced third-quarter results, where sales fell 17% to just over €811m for the 13 weeks to the end of April 2018. Underlying sales in the business declined 1.2% in the quarter as sales volumes fell almost 3%.

By division

Aryzta’s business in North America continues to struggle badly with sales plunging more than 28% in the quarter to €340m. The disposal of its Cloverhill business accounted for most of this decline, knocking 16% off third-quarter sales in North America. Currency headwinds negatively affected sales in North America by 11%. Aryzta said underlying sales in the business fell more than 1%.

In Europe, Aryzta reported a 6.4% decline in sales to €409m. However, the company will be worried to see underlying sales declining almost 3% in the quarter as volumes declined 5%. Sales volumes in Aryzta’s European business have now declined for four consecutive financial quarters. The company also noted the sustained high butter price in Europe as a significant challenge.

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