Swiss-Irish food group Aryzta recorded organic revenue growth of 13.3% in the six months to January 2022, with foodservices seeing the “biggest recovery” after the coronavirus crisis. Covid-19.
Aryzta, which holds the Cuisine de France label here and supplies the likes of McDonalds and Subway, said performance was driven by volume growth of 11.3% as “the normalization of the company took hold”.
It achieved overall organic revenue growth of 13.3%. The price impact accelerated in the second quarter and this trend is expected to accelerate further in the second half of its fiscal year to recoup costs.
Divestitures reduced revenue by 2.7%, primarily due to the divestiture of the Brazil business in the first quarter. Total revenue from continuing operations increased by 11% to €835.3 million during the period.
Catering has seen the ‘greatest recovery’ as the impact of Covid-19 faded and society reopened and normalised. Organic growth there was 30.7%, while fast food grew by 10.9% and retail improved by 6.5%.
Regionally, Europe performed “very well,” achieving organic growth of 14.3% as restrictions eased in many Aryzta markets.
The rest of the world saw “resilient” organic growth of 7.7% after being negatively impacted by longer Covid-19 restrictions in Australia and New Zealand.
The performance reflects “stronger customer engagement” across all markets and channels and the “success of the lean structure and agile decision-making process”, the group said.
“Product innovation and renovation has also increased as customers seek more personalized products,” he continued. “It helped deepen customer engagement, which led to beneficial mix changes.
Underlying earnings before interest, tax, depreciation and amortization (EBITDA) for the period increased to €104 million, reflecting growth of 36.7% and an acceleration in the underlying EBITDA margin of 240 basis points to 12.5%.
These improvements “reflect the combination of accelerated organic growth, business simplification, cost reductions and disciplined cost management as well as strong gross margin protection.”
The company’s free operating cash flow amounted to €11 million, representing a reduction of €16.5 million in cash flow from continuing operations compared to the prior period.
The main driver of this evolution has been an investment in working capital to support the growth and resilience of its supply chain. It was also impacted by one-time effects including timing, temporary Covid restrictions and the divestment in Brazil.
Industrial investments increased by 5.7 million euros to support additional growth-enhancing investments. These effects were partially offset by an increase in EBITDA and a reduction in non-recurring expenses.
Total restructuring costs from continuing operations amounted to 3.9 million euros, a “significant decrease” compared to the 39.7 million euros incurred the previous year.
Its net debt increased to €299.6 million due to €182.9 million of hybrid dividend payments net of disposal proceeds received mainly for Brazil of €110.9 million.
Aryzta warned that the inflation of all the costs of labor inputs, raw materials, logistics and in particular energy “continued its upward trend”, the prices and availability of these key inputs remain highly volatile.
“A further significant effect on prices is expected in the second half of the year to cope with the upward trends in inflation on all inputs,” he added.
Full-year 2022 guidance calls for organic revenue growth of between 12% and 14%, while the group reiterated underlying EBITDA margin guidance.
Aryzta Acting President and CEO Urs Jordi said, “Organic growth accelerated due to strong volume growth and new positive pricing to support double-digit revenue growth performance. .
“Profitability has also improved, reflecting the benefits of our streamlined structure, disciplined cost management and strong organic growth, despite supply chain volatility and significantly higher input costs.
“Management is focused on maintaining the improved business momentum as well as its financial performance to continue building a sustainable business focused on organic growth.”