Speciality bakery group Aryzta has forecast earnings growth (EBITDA) will be in the mid to high single digits for its 2019 financial year. The embattled bakery giant reported organic sales growth of 0.3% for the first quarter of its 2019 financial year on Monday as revenues reached €862.3m. A 0.6% decline in sales volumes was more than offset by a 0.9% increase in pricing.

Reported revenue was down more than 5% year on year, which is mainly due to business disposals in the last year. Aryzta reported organic sales growth of 2% in its European business to reach €430.3m for the quarter, while sales grew by almost 8% in its rest of world division to €65m.

Aryzta’s business in North America continues to struggle due to ongoing cost inflation, particularly in terms of labour costs. Organic sales in Aryzta’s North America division fell almost 3% year on year to €367m as sales volumes fell 2% and prices dropped 1%.

Capital raise

Earlier this month, Aryzta completed a €740m capital raise after issuing new shares in the company. Management in Aryzta intend to use this fresh capital injection to reduce net debts in the business by €1bn over the next four years as well as implement a turnaround plan for Aryzta known as Project Renew.

As part of Project Renew, Aryzta will invest €150m over the next three years to deliver €200m in savings by 2021. Most of the €150m will be invested in automation in Aryzta’s bakeries, which Aryzta management forecast will result in cost savings of €90m per annum post 2021.

Aryzta chief executive Kevin Toland said the company is continuing to address the challenges and reduce its cost base.

“We remain resolutely focused on our core, the frozen B2B bakery market and have the management team and resolve to implement what is a multi-year turnaround strategy,” said Toland.