Aryzta is known for manufacturing hamburger buns for McDonald’s. It acquired Canada’s Pineridge Bakery and US-based Cloverhill Bakery for a collective sum of $1.01bn about three years ago, this site previously reported.
The company told BakeryandSnacks the affected employees, who make up around one-third of Cloverhill’s work force, were hired through a third-party staffing agency. It, however, did not provide the name of the agency.
“By merit of these employees being agency workers, Aryzta did not have the ability to verify documentation of these workers, and the immediacy and extent of the risk that existed was not known to the board,” Aryzta said.
While the Cloverhill business had been profitable every month since its acquisition, following this disruption, it has incurred €16,349,000 ($19.37m) of losses during June and July 2017, the company added.
“The [Cloverhill] business is expected to return to profitability in fiscal year 2018, but will be loss making for a number of months until then,” Aryzta said.
Aryzta’s latest financial report showed its organic growths during Q4 and fiscal year 2017 declined by 10.6% and 6.3% respectively.