Market conditions in UK and Ireland still tough, notes Aryzta
The group notes a 55 per cent hike in revenue in the past 9 months underpinned by the contribution from strategic acquisitions in its third quarter trading update.
Citing continental European markets as being key growth drivers, Aryzta stressed that the UK and Irish markets were still moderately in decline.
Commenting during a conference call on the company’s financial reporting, CEO Owen Killian did note a greater degree of stability in Ireland and the UK with Aryzta’s double digit fall in those countries shifting to a single digit decline in the quarter under review.
However, he said that “Consumers continue to be badly hit in those markets, and we are not seeing any of the active consumer bounce lifting our revenues elsewhere.”
Killian added that raw material food ingredient inflation has continued and shows no signs of abating, and that the bakery company would have to pass on price increases into Q4 as well as Q1 of the next financial year.
There is little visibility on grain prices, he stressed during the conference call, with increasing weather related concerns about the 2011 harvest.
In terms of any spare capacity following the acquisitions of entities such as Fresh Start Bakeries and Maidstone, the CEO said that Aryzta is currently at about 70 per cent utilisation across the group.
He stressed that the ongoing benefits arising from the takeovers was the geographical repositioning and the addition of new bakery segments rather than the leveraging of synergies.
Its Food Europe unit’s revenue grew by 13.5 per cent in the third quarter to €296.1m with acquisitions contributing 8.2 per cent, while the Food North America division's revenue grew by 129 per cent in the third quarter to €310.6m with acquisitions contributing 123 per cent.
Continued robust revenue growth in the ‘rest of the world’ was somewhat offset by the effects of Japan’s natural disaster during the quarter, compared with previous quarters, added the company.