Aryzta Food North America profit climbs in '10

by Eric Schroeder
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ZURICH, SWITZERLAND — Weak market conditions and consumer demand for value remained center stage in North America for Aryzta AG. The Swiss-based company said operating profit within its Food North America segment rose nearly 4% during fiscal 2010 to €69,911,000 ($94,155,000), while sales fell 4% to €571,600,000 ($769,342,000).

“Cost curtailment and operating efficiencies have compensated for weak revenues (following a high 2009 growth comparator) in the period,” Aryzta said.

Aryzta’s Food North America unit includes the La Brea Bakery and Otis Spunkmeyer businesses, as well as the recently acquired Fresh Start Bakeries (incorporating Pennant Foods and Sweet Life) and Great Kitchens.
In its Food Europe unit, operating profit fell 3% to €131,245,000 ($176,627,000) on an 8% decline in sales to €1,072,000,000 ($1,442,000,000).

“In Europe, the decline in revenue has been mostly evident in the U.K. and Ireland,” Aryzta said. “The consumer has endured stringent austerity measures, significantly impacting their disposable income. Support was provided to customers, which reduced costs to serve, particularly on the island of Ireland, facilitating operators to increase their value offerings.”

Operating profit within the Food Rest of World unit soared 181% to €5,963,000 ($8,030,000) on an 8% gain in sales to €35,800,000 ($48,210,000).

“Aryzta has existing businesses in Japan, Malaysia and Australia,” the company said. “Aryzta is continuing to understand the customer diversity and opportunity in this vast market. Through the acquisition of Fresh Start Bakeries (and its incorporated business of Sweet Life), Aryzta now has new business operations in Brazil, Australia and New Zealand as well as joint venture production facilities in Chile and Guatemala.”

On a companywide basis, Aryzta operating profits including associates and joint ventures rose 2% to €304,586,000 ($410,193,000) in fiscal 2010. Sales were €3,009,726,000 ($4,053,637,000), down 9% from fiscal 2009.

“Economic conditions for consumers remain very challenging,” Owen Killian, chief executive officer, said in a Sept. 27 trading update. “Aryzta has responded by continuing to focus on operating efficiencies, cost management, innovation and cash flow generation, while working alongside its retail and food service partners to provide fresh and convenient, high quality baked goods at competitive prices.

“Securing two complementary acquisitions in Fresh Start Bakeries and Great Kitchens substantially enhances Aryzta’s strategic market position by developing partnerships with leading operators in every consumer channel. Aryzta’s expanded product range, increasingly diversified geographical footprint and greater channel access to consumers offers further opportunities for growth over an enlarged business base.

“The operating environment is likely to remain difficult in many key markets. Aryzta’s business model is therefore focused on operational resilience, while remaining well positioned to benefit from any economic recovery.”

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