Zurich / CH. (aag) Swiss Aryzta AG announced its third quarter update for the period ended 30 April 2015. Commenting on the results, Aryzta AG Chief Executive Officer Owen Killian said: «As anticipated, underlying revenue declined in North America by (6.7) percent in the quarter and this trend is expected to continue through Q4. Food Europe has yet to recover in Switzerland, where the consumer economy has suffered since the removal of the currency peg in January and in France due to security concerns in the quarter. Based on an expected flat trading performance within the Food Group, combined with a reduced 29 percent contribution from Origin, underlying fully diluted EPS is expected to be circa 400c in FY 2015. Notwithstanding the short-term weakness in performance, Aryzta is confident the business model is intact. There is increasing evidence of cross-selling through the existing Customer Centric Strategy and this will deliver future earnings growth».
Revenue for the 13 weeks ended 30 April 2015 (unaudited)
| . | Europe | North America | Rest of World | Total Group |
| Revenue | 405.9 million EUR | 509.4 million EUR | 57.9 million EUR | 973.2 million EUR |
| Underlying growth | 1.8 percent | (6.7) percent | 3.4 percent | (2.3) percent |
| Acquisitions / (disposals), net | (0.6) percent | 6.9 percent | – | 3.1 percent |
| Currency | 3.5 percent | 21.3 percent | 5.6 percent | 12.4 percent |
| Revenue growth | 4.7 percent | 21.5 percent | 9.0 percent | 13.2 percent |
Revenue for the nine months ended 30 April 2015 (unaudited)
| . | Europe | North America | Rest of World | Total Group |
| Revenue | 1’211.0 million EUR | 1’446.6 million EUR | 173.5 million EUR | 2’831.1 million EUR |
| Underlying growth | 2.2 percent | (6.1) percent | 5.8 percent | (1.4) percent |
| Acquisitions / (disposals), net | 0.9 percent | 21.2 percent | – | 10.3 percent |
| Currency | 2.1 percent | 12.5 percent | 2.8 percent | 6.9 percent |
| Revenue growth | 5.2 percent | 27.6 percent | 8.6 percent | 15.8 percent |
As announced in March 2015, during the period Aryzta placed 49 million shares in Origin Enterprises PLC. As a result, the Group´s remaining 29 percent interest in Origin will be presented as discontinued operations during the current and prior comparative periods, up until the transaction date and as an associate interest thereafter. Accordingly, Origin revenues are no longer consolidated within the Group´s result or included as part of this trading update.
Revenue
Total revenue grew by 13.2 percent in the quarter to 973.2 million EUR. Underlying revenue growth declined (2.3) percent in the period. Acquisitions provided 3.1 percent growth and currency movements provided growth in the quarter of 12.4 percent. Europe revenue grew by 4.7 percent in the third quarter to 405.9 million EUR. Underlying revenue growth was 1.8 percent. Revenues declined by (0.6) percent from the impact of acquisitions and net disposals, while currency added 3.5 percent. European revenue remained largely driven by growth in In-Store-Bakery in the large retail channel led by discounters. However, European margin performance has softened and has yet to recover. Switzerland was impacted negatively from the decoupling of Swiss Franc and the Euro, while France suffered from negative consumer sentiment due to security concerns. North America revenue grew by 21.5 percent in the quarter to 509.4 million EUR. Underlying revenue growth declined (6.7) percent, a 170 bps improvement over the Q2 (8.4) percent. Acquisitions provided 6.9 percent growth, while currency movements positively impacted by 21.3 percent in the quarter. The decline in underlying revenue in North America reflects the impact of the SKU rationalisation strategy to improve capacity utilisation and reduce investment CapEx allocation. This trend is expected to continue through Q4 with the consequential impact for margins from negative operating leverage. Rest of World revenues increased by 9.0 percent in the quarter to 57.9 million EUR, with an underlying growth contribution of 3.4 percent and a favourable currency impact of 5.6 percent. The underlying revenue growth remains consistent with historical quarterly revenue development trends, which is a combination of capacity commissioning and market growth.
Picard
The investment in Picard announced on 31 March 2015 is still awaiting regulatory approval before it can complete.
Associates + Joint Venture
The Group´s contribution from Associates and JV for the year ending 31 July 2015 is expected to consist primarily of its 29 percent share of Origin Enterprises´ earnings during the four months following the Group´s reduction in its shareholding in Origin.
Financial Position
As of 31 January 2015, the consolidated Net Debt of the Group amounted to 1’861.3 million EUR (including overdrafts and finance leases and net of cash and related capitalised upfront borrowing costs). As of 31 January 2015, the Food Group interest cover was 8.38x (excluding hybrid interest). The weighted average maturity of the Food Group gross term debt was 4.97 years. The weighted average interest cost of Food Group debt financing facilities (including overdrafts) was 3.83 percent. Aryzta intends to maintain an investment grade position in the range of two to three times net debt to Ebitda.
Outlook
Based on an expected flat trading performance within the Food Group, combined with a reduced 29 percent contribution from Origin, underlying fully diluted EPS is expected to be circa 400c in FY 2015.
