Aryzta is reviewing the Swiss bakery group’s operations in Germany after what the company characterised as a challenging first half.
Germany was blamed for pulling down revenues in Europe, which fell 3.4% on an organic basis to €942.7m ($1.08bn). Volume/mix in the region dropped 2.5% even though pricing was down 0.9%.
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In a statement today (10 August) outlining the six-month results, Aryzta said: “Germany was the most challenged market, reflecting its high price sensitivity. It also reflects fragile consumer spending and some additional bakery capacity, which is impacting the market supply/demand balance.
“This German underperformance offset growth achieved in other key markets.”
The publicly listed baker added that the business is “undertaking a full review of all options for Germany”.
An Aryzta spokesperson confirmed with Just Food that Germany generated revenue of EUR289m for the group in the first half, declining to provide any details on profits. Europe is its largest market by sales.
Aryzta operates a network of production facilities in Eisleben, Nordhausen and Gerolzhofen in Germany supplying the retail and foodservice channels, as well as quick-service restaurants.
Eisleben is the largest site, with five plants and 23 production lines producing rolls and baguettes, pretzels, doughnuts and croissants, the spokesperson clarified.
At Nordhausen, the company manufactures rolls, ciabatta, baguettes and Berliner pastries. Gerolzhofen produces croissants, sweet pastries, savoury snacks and cookies.
The company also has an office in Berlin housing the German management team.
Aryzta employs around 2,000 people in Germany, the spokesperson added.
Interim CEO and chairman Urs Jordi told analysts on a follow-up results call today that a full exit from Germany was an unlikely option but the review will include an assessment of Aryzta’s business model, manufacturing set up and “market coverage”, the spokesperson confirmed.
“We expect to provide an update towards year-end,” the spokesperson told Just Food in terms of the timeline. “It is too early to comment on any potential implications for employees. These will depend on the outcome of the review.”
Organic revenues for the Aryzta group also dropped in the first half, falling 2.7% to €1.06bn. Volume/mix declined 2.1%, with pricing down 0.6%.
EBITDA was impacted by “one-time costs” of around €5.4m, mainly due to the company’s Project Excellence savings programme. Aryzta aims to realised €20-30m in savings by 2028 under the project by “optimising operations and streamlining its organisation”.
The company said EBITDA dropped 7% in the half to €139.9m, while the margin decreased 70 basis points to 13.2%.
Net profit retreated 3.9% to €47.2m and diluted EPS fell 1.1% to €1.82.
Jordi said in the results statement: “While H1 was challenging, we accelerated cost optimisation measures to protect profitability.
“These measures are delivering attractive savings and, together with good visibility on our key input costs, support our confidence in achieving our profitability guidance for the full year.”
For the full year, Aryzta expects to deliver organic growth at the “lower end” of its guidance range of low to mid-single digits and an “improvement” in EBITDA from the prior 12 months.
Meanwhile, in the company’s second reporting division, the rest of the world business saw organic sales climb 2.7% to €121.2m. Volume/mix was up 1.1% while pricing increased 1.6%.
In acquisitions, Aryzta announced a deal in June for Société Européenne des Beurres (SEB), which was bought through the bakery group’s French Coup de Pates business.
SEB is a distributor supplying frozen bakery products in south-west France.
Aryzta said today that SEB, previously one of its suppliers, bolsters its foodservice operations in Europe.
