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The ARYZTA bakery products company positively surprised the first quarter of the current fiscal year 2018/19, after the last fiscal year had again provided two warnings on the results in case of high uncertainty.
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Zurich (awp) – The ARYZTA bakery products company positively surprised the first quarter of the current fiscal year 2018/19, after the last year with two warnings on profits had generated a great deal of uncertainty. Unexpectedly, the company recorded a slight increase in organic sales growth. The market reacted positively to the result.
Overall, sales from August to October 2018 decreased by 5.2% to 862 million euros, mainly due to disposals and negative currency effects. Organically, that is to say alone, ARYZTA was able to increase its sales by 0.3%; In contrast, analysts expected further declines.
The development of the previous quarter continued
The manufacturer of bakery products is thus associated with the development of the fourth quarter of the past year. At that time, ARYZTA had again posted positive growth for the first time after several quarters of declining organic growth.
The head of positive organic growth was according to Monday's announcement, especially the European company. Although sales fell 1.1% to 430 million euros, organic growth was 2.0% higher.
In North America, sales decreased by 10.4% to 367 million euros; organically, it decreased by 2.8%. In the "rest of the world", which accounts for less than 10% of the business, sales fell only 0.1%, or 7.7%, organically.
"Sales grew in the first quarter as expected," said Kevin Toland, head of the company, during a conference call. Overall, the environment remains difficult, but thanks to the recent capital increase approved by shareholders, they are once again able to return to growth, says the boss of the company.
Toland sees the biggest challenges in North America, where, in addition to lower prices, the company is primarily facing rising labor costs. He wants to counter it by investing in automation. About two thirds of the total planned investment of 150 million euros over the next three years will be spent automating work processes around the world.
As a result, and with new cost-cutting measures, ARYZTA plans to save $ 90 million annually from the 2020/21 fiscal year.
Outlook confirmed
In total, the CEO looks ahead with more confidence. Business is expected to remain stable in 2019 and the measures introduced by Renew's energy efficiency program are expected to bear fruit, he says. Toland confirmed the outlook for the whole of the current year, already published previously, and expects EBITDA to remain at a medium to high level of organic growth.
ARYZTA's shares reacted with a sharp rise in prices on earnings. At the close of trading, securities rose by 11.2% to 1.35 francs, while the overall market rose by 0.89%. Although analysts have estimated turnover above expectations as positive for equities, they still want to wait for the winning numbers to eventually take a less cautious stance on the company.
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