ARYZTA shares sharply: Outstanding sales growth and confirmed targets | 11/26/18



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The ARYZTA bakery company surprised in the first quarter of the current fiscal year 2018/19 positively, after the last year still provided two profit warnings for strong uncertainty.

(Message supplemented with closing price)

Zurich (awp) – The ARYZTA bakery company surprised in the first quarter of the current fiscal year 2018/19 positively, after the last year with two profit warnings caused great uncertainty. In the organic growth of sales, the company unexpectedly had a small advantage. The market responded positively to the result.

Overall, sales in the period from August to October 2018 decreased by 5.2% to 862 million euros, mainly due to sales of activities and negative exchange effects. Organically, that is, alone, ARYZTA managed to increase sales by 0.3%; On the other hand, analysts expected further declines.

The development of the previous quarter continued

With this, the baked goods maker joined the development of the fourth quarter of last fiscal year. At that time, ARYZTA once again showed positive development for the first time after several quarters of declining organic growth.

Responsible for positive organic growth was according to Monday's announcement, especially European business. 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; organically, decreased by 2.8%. In the "rest of the world", which accounts for less than 10% of business, sales have dropped only 0.1%, or 7.7%, organically.

"Sales developed in the first quarter as we expected," company director Kevin Toland said in a teleconference. Overall, the environment remains challenging, but thanks to the recent capital increase approved by shareholders, they are back to the position of returning to growth, continues the head of the company.

Toland sees the biggest challenges in North America, where, in addition to falling prices, the company is mainly dealing with rising labor costs. He wants to neutralize the latter with investments in automation. About two-thirds of the projected total investment of € 150 million over the next three years will be spent on the automation of work processes around the world.

As a result, and thanks to new cost-cutting measures, ARYZTA aims to achieve an annual cost savings of 90 million from fiscal year 2020/21.

Outlook confirmed

All in all, the CEO is looking to the future with more confidence. Business is expected to remain stable by 2019 and measures introduced by the Renew efficiency program are expected to produce results, he believes. Toland has confirmed the outlook for the current full year, which has already been released earlier, and expects EBITDA to remain at a one-digit average organic growth rate.

ARYZTA's shares reacted with strong price increases in results. At the close of trading, securities rose 11.2% to 1.35%, while the general market (SPI) rose 0.89%. Although analysts have evaluated the turnover above their projections as positive for stocks, they still want to wait for the winning numbers to possibly take a less cautious stance toward the company.

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