Aryzta AG: FY-2018 results and further capital raise details

Zurich / CH. (aag) Swiss-Irish Aryzta AG announced results for the financial year ended 31 July 2018 and provided further details on planned 800 million EUR capital raise.

Key Developments

  • Appointed new management team including new CEO, CFO, Chief Strategy Officer, Chief People Officer, General Counsel and new CEOs of both the North American and European businesses.
  • Appointed three new Independent Directors. Subject to their election, the Board will comprise 10 Directors with an average tenure of two years.
  • Undertook an in-depth review of its strategy and developed a bottom-up business plan, focused on capitalising on its established, leading positions in the large and growing frozen bakery market globally.
  • Commenced a multi-year turnaround programme to deliver stability, performance and growth through a greater focus on customer relationships and operational excellence.
  • Launched Project Renew, to implement cost reduction opportunities and efficiencies across the business with more than 200 initiatives which aim to drive EUR 200 million in savings over a three-year period with annual targeted run-rate savings of EUR 90 million by FY2021.
  • Completed sale to the value of EUR 137 million of non-core and non-strategic assets including Cloverhill, La Rousse and Signature Flatbreads.
  • Fully underwritten capital raise up to EUR 800 million of equity capital to reduce debt and create the necessary strategic and financial flexibility to further strengthen the balance sheet, fund the turnaround programme and support the business plan for return to growth.

2018 Financial Summary

  • Q4 and full year financial performance in line with expectations
  • Revenue decrease of (9.5) percent to EUR 3,435 million; (1.2) percent organic decline (ex Cloverhill +0.5 percent)
  • Aryzta Europe revenues decreased (1.6) percent to EUR 1,710.6 million; +0.9 percent organic growth
  • Aryzta North America revenues decreased (18.4) percent to EUR 1,468.0 million; (4.7) percent organic decline; (ex Cloverhill (1.2) percent )
  • Aryzta Rest of World revenues decreased (0.9) percent to EUR 256.8 million; +7.9 percent organic growth
  • Underlying Ebitda declined by (28.2) percent to EUR 301.8 million
  • Underlying Ebitda margin declined (230) bps to 8.8 percent
    • Decline due to previously disclosed issues;
    • Butter pricing, Brexit and insourcing in Europe; and
    • Labour and distribution inflation in US
  • Net Debt:Ebitda 1 (Syndicated Bank RCF and Schuldschein) of 3.83x
  • Underlying net profit decreased (72.3) percent to EUR 49.6 million
  • Underlying diluted EPS decreased (72.5) percent to 55.4 cent
  • IFRS operating loss amounted to ( EUR 423.3 million) while IFRS loss for the year reached ( EUR 470.0 million)
  • IFRS diluted loss per share reached (561.8) cent

Capital raise

On 13 August 2018, following a detailed review of its capital structure, with the assistance of its independent financial advisors, Aryzta announced that it intended to raise up to EUR 800 million of equity capital through a rights issue with pre-emptive rights for existing shareholders.

The sizing of the capital increase reflects Aryzta’s requirements to obtain the necessary strategic and financial flexibility to implement its strategy, strengthen its balance sheet, provide funding to execute Project Renew and have the ability to maximise the value of non-core asset disposals. The proceeds from the capital raise will be used for term loan repayment, liquidity improvement and general corporate purposes.

The capital raise is fully underwritten by BofA Merrill Lynch and UBS, acting as Process Banks and Joint Global Coordinators, Credit Suisse, JP Morgan and HSBC Bank plc as additional Joint Global Coordinators, and Mizuho International plc, Rabobank and Crédit Agricole CIB as Joint Bookrunners. The underwriting agreement is subject to conditions in line with market practice for similar transactions, including the absence of any material adverse developments relating to the Aryzta group.


The objectives of the capital raise are to:

  • Strengthen the balance sheet through reduced leverage: net senior debt:Ebitda to be lowered from 5.1x at 31 July 2018 to c.2.6x pro forma after the capital raise.
  • Improve liquidity and financial flexibility.
  • Provide funding to implement the three year cost savings programme, Project Renew, which targets annual recurring run-rate synergies of EUR 90 million beginning in FY2021 with a one-off cost of EUR 150 million.
  • Achieve required flexibility to maximise value of non-core disposals, including the ongoing Picard divestment.
  • Normalise balance sheet to be commensurate with comparable public companies through deleveraging programme.
  • Provide greater certainty for its customer and supplier base and stability versus competitors.
  • Support focus on driving business and operational performance.
  • Provide funding for other selective investment projects in growth markets and general corporate purposes.
  • Provides an effective capital structure which fully focuses management.

Changes to the Management and Board of Aryzta

During FY2018, the Board has worked to re-focus the strategy, re-build the management team and put the business back on the path to stability, performance and growth. Aryzta has appointed a new CEO, CFO, Chief Strategy Officer, Chief People Officer, General Counsel and new CEOs of both its North American and European businesses. In total, seven of the nine members of the Executive Committee, including the CEO and CFO, have been appointed since September 2017. In addition, as part of Aryzta’s commitment to stabilise the business and return to performance and growth, there has been significant renewal at the Board level. The progressive refreshment and orderly succession of the Board was determined to be in the best interests of shareholders, as it ensures that diverse and fresh perspectives are brought to the Board while preserving continuity and knowledge of Aryzta’s business. Following the 2018 AGM, subject to shareholder ap- proval of all Directors, the Aryzta Board will comprise 10 Directors, with an average tenure of two years.


After completion of the capital increase, Aryzta believes it will be well-positioned to deliver on its key objectives of stabilising its business and driving performance and growth by exploiting the potential of the steadily growing frozen bakery market through strengthening customer relationships, improving operational efficiency and executing Project Renew. For FY2019, Aryzta expects underlying performance to be stable and the early benefits from Project Renew to flow into the P+L. The Company expects mid- to high- single-digit organic Ebitda growth for FY2019 (applying budget FY2019 exchange rates on a like-for-like basis and excluding any disposals). Aryzta is targeting Ebitda margins in the medium-term in a range of 12 percent to 14 percent as it progresses in its multi-year turnaround strategy. Capital expenditure in manufacturing is expected to be circa 3.5 percent to 4.5 percent of revenue in the medium-term (excluding investments in Project Renew).

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