Weak growth in the UK and Ireland was the main driver of a slide in full-year revenues for Swiss bakery ARYZTA.
CFO Patrick McEniff told analysts on the firm’s earnings call today (27 September) that while sales in Europe declined 8.2%, Aryzta’s businesses in Ireland and the UK experienced declines of up to 20%.
“The main driver of the revenue decline in the Aryzta business was in Ireland and the UK which experienced declines of up to 20%,” McEniff said. “The main channel in Ireland is convenience and in the UK business is dependent on convenience and premium channels. This decline was majority volume driven and was compounded by pricing in the latter part of the year.”
He added that while the rest of the European business was “stable”, it did not demonstrate historic growth trends.
In continental Europe, the situation, McEniff said, is “not nearly as severe”, with “stable revenues, much more hopeful signs, particularly in Germany where consumers are working through this and life has returned to some sense of normality”.
CEO Owen Killian added that the “depth, severity and length” of the recession in Ireland and the UK had been particularly “surprising”.
“Many of our customers are still struggling with high rents and cost structures,” Killian said. “Our business is completely dependent on product availability… and we’re working very hard to support our customers to reposition a value proposition and to position our businesses so that they can compete in this very difficult environment.”
Despite this, Killian remained optimistic of future growth for Ireland and the UK.
“A 20% fall in revenues should not be repeated but we have not seen stabilisation across that weak segment of our business (UK and Ireland), and it is an important part of our business,” Killian said. “There is a good opportunity to see improvement if we can get back to growth in this market place.
“We are not very confident of revenue growth across Europe in the current year, because we are not seeing substantial recoveries in consumer spend, but maybe in 2011,” he added.
For the year to the end of July, group operating profit rose 2.2% to reach EUR305m (US$411m), while EPS increased 4% to 244 cents. Revenues slid 8.6% to EUR3.01bn.
Aryzta shares were down 0.78% or CHF0.35 (US$0.35) to CHF44.70 at 15.27 CET today.