Bakery giant Aryzta has announced that its full-year performance for 2021 has exceeded expectations following the implementation of a simplification and de-layering process to eliminate global cost structures and focus on multi-local structures and decision making.
The company added that its strategy to focus on multi-local execution has supported its return to organic growth – observed in the last two quarters of its financial year 2021.
The multi-local strategy allows local management and teams to take responsibility for costs and customer-facing decisions.
Customer feedback has been very positive and confidence and employee morale within the businesses has significantly improved, the company noted.
Aryzta AG chairman and interim CEO Urs Jordi commented, "Aryzta begins its new fiscal year FY 2022 with growing confidence [after] having completely transformed the business strategy to a multi-local focus [approach]. We have improved operational efficiencies and de-risked the financial profile. Organic growth has returned after years of decline and we expect to sustain this positive organic growth trend in FY 2022.
"We have exceeded expectations in delivering on our disposal programme in terms of timing and level of proceeds. This, in turn, has allowed us to agree on a new five-year credit facility and to pay the accumulated deferred and current interest on our hybrids."
Annual Performance
The company's total revenue from continuing operations decreased by 8.6% year-on-year, to €1.5 billion.
Organic revenue declined by 6.4%, with volume losses of 7.0% and a price/mix positive impact of 0.6%.
Total revenue, including discontinued operations, decreased by 20.9% to €2.3 billion in this period.
Organic revenue declined by 6.1%, with volume losses of 7.2% and a price/mix positive impact of 1.1%, due to the challenging environment in the first half, the company said.
Underlying EBITDA from continuing operations declined by 7.9% year-on-year to €173.4 million, while EBITDA margins increased by 10 bps to 11.4%, despite the negative volume impact on the business.
Group underlying EBITDA, including discontinued operations for the financial year, amounted to €250 million, down 3.9% year-on-year, while EBITDA margins increased by 190 bps to 10.8%.
Underlying net profit for the financial year amounted to €5.2 million, compared to a net loss of €18 million in the previous financial year.
Divisional Performance
COVID-19 had a material impact on the group's performance in all channels and geographies, particularly in foodservice and to a lesser extent in QSR channels, the company noted.
The retail channel proved resilient in this period, with the company responding rapidly to the changing consumer environment by supporting its customers and calibrating its operational needs.
As a result, the company's performance improved as the year progressed, with positive growth returning to all channels by the final quarter.
Outlook
Aryzta expects to achieve a sustainable net profit in its financial year 2022.
The company expects a mid-single-digit organic revenue growth driven by further recovery to pre-COVID levels, improved customer engagement and innovation.
It has also forecast an EBITDA margin run rate of 12.5% pre-IFRS 16 by the end of FY 2022 with de minimis non-recurring costs.
The company noted that it is an intermediate target and will need to improve further over time.
Aryzta added that inflation across all costs lines, raw materials, logistics, services, and labour, has overtaken COVID-19 in terms of ongoing business challenges.
However, it added that the business is well positioned to manage these risks provided market competitors behave rationally.
