Aryzta Closes Plants and Reduces Labor Costs to Fight Back Covid-19 Crisis
Aryzta has announced it is taking decisive action to maximize cash, reduce costs and maintain a strong liquidity position during the Covid-19 crisis.
Among the measures taken:
– Significantly reduced capital spend – all future capital projects suspended.
– Delivery of further operating cost reduction and efficiency.
– Actively reducing capacity to meet demand.
– Eliminated all discretionary costs.
– Reducing labor costs.
– Actively reducing hours/workforce in the most impacted countries.
– Accelerated consolidation and optimization of manufacturing capacity.
– Two smaller plants closed in Europe and ongoing evaluation of further shuttering of plants and lines.
– Project renew remains in full action but future programs postponed where further cash would be required.
– Avail of all relief and incentive programs, including labor compensation initiatives.
On the other hand, Aryzta stated that it has no material debt maturities over the coming 18-month period (EUR17m due March 2021) and currently holds liquidity in excess of EUR360m, reflecting seasonal patterns, comprising cash of EUR310m and undrawn credit facilities.
“Aryzta has full business continuity plans in place and active where necessary to maintain service levels and to meet our customers’ expectations. Aryzta’s board and management, together with all of its employees, are committed to playing our part as an essential industry providing food at this difficult time. Actions are progressing to implement flexible working policies and, where necessary, to adjust available capacity to the rapidly changing demand of the different channels,” the company stated.
In Europe, QSR (10% of European revenue) and foodservice have been strongly impacted by the significantly reduced footfall following government related restrictions. Retail is performing well with a small uplift coming from this channel.
In North America, a similar pattern is now visible in the major states; with QSR and foodservice affected by Covid-19 related restrictions, partially offset by drive-through service offerings or home delivery, which many restaurants and QSRs provide. Retail sales are still robust and orders are coming through the supply chain.
In the rest of the world, the foodservice channel, particularly in South East Asia is being strongly impacted, while the QSR segment in Brazil and the Pacific region is challenging due to the reduced footfall resulting from government-related restrictions.
Regarding health and safety, the key priority of the Aryzta board and executive management is to ensure the health and wellbeing of its staff, customers and suppliers during this challenging period. “We are continuously monitoring the situation with our key stakeholders and are actively assessing the consequences of recent government responses to Covid-19 within the different channels,” the company said in an announcement, adding that “Our focus is to ensure the highest quality and product safety standards across all bakeries in full compliance with reinforced Covid-19 protocols.”