Aryzta Reopens Bakeries Amid Internal Struggle

Aryzta is reopening baking plants across the world, but keeping costs under control “to the maximum extent possible” remains a key priority for the Swiss-based company, as shown in a revenue and liquidity update. Aryzta said it continues to adjust its business to reflect changes in the economic environment.

In North America, only one baking facility is still fully paused, down from five that were paused as of April 30, and 90% of the company’s lines are operational. In Europe, only one baking plant is fully paused, which compares with three on April 30, and approximately 80% of production lines are operational.

The Dublin-listed company which owns the Cuisine de France and Otis Spunkmeyer labels has been struggling to halt a decline in earnings, particularly in the US, and negative investor sentiment towards its complex capital structure.

The investors, led by Swiss group Veraison and Aryzta’s largest investor Cobas, are seeking to oust chairman Gary McGann and four other directors in a bid to reverse the decline in shareholder value, which is down more than 85% since late 2018.

The company, which is in the midst of a strategic review, will need to sell an additional EUR600m of assets to reduce its “unsustainable financial structure”, according to a statement from Veraison Capital, a Switzerland-based asset manager, and Cobas Asset Management in Spain. The two investors have pooled their holdings, and now hold 20% of the Swiss-Irish bakery firm, making them the largest shareholders.

Chief executive Kevin Toland has sold off a number of “non-core assets” – including foodservice businesses Delice de France and La Rousse Foods, as well as Aryzta’s stake in French frozen food retailer Picard – but net debt still stands at EUR1.7bn, including the hybrid instruments.

Aryzta generates the majority of its revenue in Europe and North America, with a small contribution from the ‘rest of the world’, namely South America, Asia, Australia and New Zealand. The company sells into the retail, foodservice, convenience and quick-service restaurant channels, which includes McDonald’s and Subway. It also supplies products under its private label, as well as its own brands.

In the view of Veraison and Cobas, Aryzta’s European operations have stagnated over the last five years and the company has lost market share, while North America is in decline and the rest of the world is small in comparison.

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