Bakery group ARYZTA booked a jump in first-half sales and earnings this morning (16 March) but shares fell as the contribution from acquisitions lifted a weaker-than-expected organic performance. 

The company said total revenue increased by 13.6% to EUR2.39bn (US$2.53bn). Sales from Aryzta's food group were up 17.2% driven by gains in North America where the group has acquired two businesses, Fresh Start Bakeries and Great Kitchens. However, underlying revenue fell 1.5% on a group-wide basis and the company flagged SKU rationalisation in North America as hitting the organic result. 

MainFirst analyst Alain-Sebastian Oberhuber said the SKU rationalisation was taking longer than expected. "The weakness of the lower margin improvement is the development in North America as Aryzta is rationalising SKUs further due to a) weakness of some clients and b) weaker macro growth. The rationalisation will take longer than previously expected," he noted. 

Group EBITA increased by 15.5% to EUR229.0m and EBITA margin rose by 20bps to 9.6%. Reported net profit rose to EUR57.6m in the six months to January 2015, compared to EUR40.6m in the year-ago period. 

CEO Owen Killian said the group's top line performance "underscores the substantial expansion of our food group business over the last six months"

However, he conceded:"Optimising our bakery capacity through SKU rationalisation continues to negatively impact underlying revenue growth in North America, reflecting the timing of replacement volume."

Aryzta shares fell 10.1% in early trade today, dropping to CHF68.95 at 9.50 am CET. 

Click here to view the results presentation.