Aryzta AG: Acquisitions drive revenues

Zurich / CH. (aag) Despite moderate revenue decreases in Europe and North America, Aryzta AG believes its acquisitions will continue to encourage revenue growth. Commenting the Q1/2011 results for the 13 weeks ended 30 October 2010, Aryzta´s Chief Executive Officer Owen Killian said in a press release:

«Food Group revenue increased by 55,1 percent in the period driven largely by acquisitions which accounted for 51,3 percent of the increase. Integration programmes are underway in both Food Europe and Food North America which will facilitate a higher service for our customers. Underlying revenue decline moderated in the period to 1,7 percent because of the Group´s continuing focus on product innovation and customer support. Servicing the needs of economically hard pressed consumers requires an even greater investment in product selection and availability. Aryzta is well positioned to support our customers in responding to this challenge».

Food Business

Food Europe revenue grew by 8,1 percent with acquisitions contributing 7,4 percent. Underlying revenue declined by 2,4 percent. Revenue decline in the UK and Ireland is moderating, reflecting the ongoing support to customers through value oriented innovation, investment in training and support, and execution enhancements. This is assisting in repositioning the value proposition in these markets. Revenue growth is starting to emerge in continental Europe, supported by continued investment in new field sales staff focused on the independent segment. The integration of the Hiestand, UK and Ireland businesses is underway. The Aryzta Technology Initiative (ATI) is currently being scoped for Food Europe.

Food North America revenue grew by 125.1 percent with acquisitions contributing 117.0 percent. Underlying revenue declined by 1.4 percent. There has been continued investment in product innovation and a focus on ATI. Aryzta is focusing on unlocking the full potential of its enlarged US bakery business through the development of a national platform with key customer relationships, a broad product portfolio, substantial manufacturing footprint and experienced committed people. In this regard, the combination of Otis Spunkmeyer, Pennant Foods and Sweet life, has commenced in Q2/2010. These are complementary businesses with shared cultures, products, capabilities, customer channels and relationships.

Food Rest of World revenue grew by 569,9 percent with acquisitions contributing 527,3 percent. Underlying revenue grew by 18,5 percent. Further investments (48 million USD) are being made in Asia and Latin America to service the quick service restaurant (QSR) segment, announced in August 2010. This involves investments in bakeries in Taiwan, Singapore and Malaysia (not yet completed) as well as the construction of a new bakery in Brazil (which has commenced).

Maidstone Bakeries Transaction

The acquisition of the outstanding 50 percent of Maidstone Bakeries closed in October 2010 for a consideration of 335 million EUR. A 400 million CHF Hybrid Instrument was used as principal financing for this acquisition. Maidstone Bakeries is no longer treated as an associate for accounting purposes and is now fully consolidated. A non cash gain on the previously owned Maidstone Bakeries is to be recorded in the first half of FY 2011. This gain, subject to independent verification, is expected to be about 120 million EUR (based on multiple of 10,2 x Ebitda). This is a requirement under the revised IFRS 3, implemented as required by the Group for the FY ended 31 July 2010.