La Brea Bakery bread, Otis Spunkmeyer cookies, Aryzta
Consumers responded positively to Aryzta's new concepts involving La Brea Bakery and Otis Spunkmeyer.

ZURICH, SWITZERLAND — Positive consumer response to new concepts involving the La Brea Bakery and Otis Spunkmeyer brands contributed to a first-quarter revenue increase of 5.2% in the Food North America unit of Aryzta AG. Underlying revenue growth, though, fell 5.6% during the quarter.

“The Q1 underlying revenue performance remains negative and as indicated in September, is not expected to turn positive until the second half of the current fiscal year,” Aryzta said in a Nov. 30 sales trading statement. “Improved utilization and volumes are required to offset the negative operating leverage experience reported in F.Y. 2015.”

Aryzta said the consumer response to initial testing of some consumer brand concepts involving La Brea Bakery and Otis Spunkmeyer “has been encouraging.”

“Aryzta will invest further in marketing and innovation in F.Y. 2016 to ensure future relevance and success,” the company said. “The benefit of this investment will be seen in greater brand penetration and underlying revenue growth going forward.”

As part of the revenue update, Aryzta disclosed the disposal of its non-core fillings, icings, glazes and mixes business in Rochester, N.Y. The revenue being disposed in F.Y. 2016 is $70 million, the company said.

Total group revenue at Aryzta increased 6.1% during the first quarter, with currency movements of 5.8 percentage points, acquisition growth of 0.1 points and negative underlying revenue growth of 0.4 points.

Owen Killian, Aryzta
Owen Killian, c.e.o. of Aryzta
“Underlying revenue development was satisfactory in Q1,” said Owen Killian, chief executive officer. “Bakeries continued to outperform while Aryzta Food Solutions remains weaker due to some channel weakness as previously discussed. Our North American business is still digesting the impact of the capacity optimization program that commenced one year ago and also the impact of some supply chain contract renewals. We are focused on building the business by unlocking the innovation potential across our customer base.”