Aryzta AG: announces H1-2024 Interim Report

Zurich / CH. (aag) Over the past six months the business performance of Swiss Aryzta AG has improved further. The Company is pleased to report that the bakers have now achieved five of their six targets set out in their 2025 mid-term plan. The Group is on track to deliver the remaining target of at least 14.5 percent Ebitda margin. Aryzta’s improved profitability and consistent solid cash generation means that the total net debt (including hybrids) to Ebitda is now at 2.9 times. The bakers have also agreed a new revolving credit facility, which allows the Group to repurchase hybrid bonds and unlock significant annual interest savings.

H1-2024 Key Highlights

Urs Jordi, Chairman and interim CEO: «Aryzta delivered another strong performance with improved profitability, solid cash generation and debt reduction. We have now achieved five of our six 2025 mid-term targets well ahead of schedule and are on track to deliver the remaining margin improvement target of at least 14.5 percent. The performance was achieved on flat volume growth impacted by active portfolio management, which favoured profitability over volume. Our strong cash generation coupled with our new EUR 930 million RCF re-financing, allows us to repurchase the larger of the two remaining CHF hybrid bonds in full, delivering significant improvements in our financial position to support continued growth. Our innovation pipeline remains strong and supportive of improved growth expectations in H2, despite consumer spending remaining under pressure due to persistent cost of living increases. We reiterate our 2024 full year guidance for low to mid-single digit organic growth and improved financial performance across all metrics.»

Outlook: Organic growth is expected to strengthen in H2 on the back of a lower comparable base, a solid innovation and sales pipeline, further recovery in QSR and a seasonally stronger second half of the year. In addition, the adverse effects on volume from active portfolio management seen in H1 will be significantly reduced in the second half. Guidance for the full year remains to deliver a low to mid-single digit organic growth. The Group is on track to achieve the last remaining 2025 mid- term target of at least 14.5 percent Ebitda margin. Aryzta continues to focus on organic growth, business improvement, free cash generation and total net debt reduction.

Profitability accelerates on flat volume: Aryzta achieved resilient results in the period with strong margin expansion despite a significant negative volume impact from active portfolio management. Ebitda margin expanded by 100bps reflecting the benefit of margin enhancing innovations, active portfolio management and disciplined cost management. The innovation pipeline remained strong, accounting for 19.4 percent of revenue, almost double compared to the prior period. Premium products accounted for c. 40 percent of revenue. In addition, Aryzta continued to grow its customer base. The overall H1 organic growth was negative (0.7) percent. This was achieved against very strong performance in the comparable period (+22 percent in H1 2023). The active portfolio management negatively impacted volume by c. 2.5 percent. In addition, a more challenging consumer environment and continuing costs inflation also affected growth, while QSR recovery is still ongoing. The pricing effect was negative at (0.4) percent reflecting some tactical price reductions despite a continuation of a volatile cost inflationary environment. Mix remained negative at (0.3) percent but continued to improve sequentially, in line with expectations.

Ebitda margin increased to 14.2 percent: Ebitda increased by 7 percent to EUR 149.8 million, corresponding to an Ebitda margin of 14.2 percent, up 100bps from the comparable period. This was supported by margin enhancing innovation, contribution from active portfolio management, operational efficiency as well as strict cost discipline. Aryzta’s profit margin is well on track to reach its mid-term target of at least 14.5 percent. Continued positive progress was achieved in the Group’s cost efficiencies initiatives, resulting in more than EUR 28 million worth of cost optimisations since the launch of the mid-term plan, of which c. EUR 10 million were generated in the first six months of 2024. As such, the cost optimisations reached the target range ahead of schedule and are supportive of the margin expansion. The Group further progressed with onboarding businesses onto the new shared service centre in Poland as well as continuing to accelerate the standardisation of the ERP landscape. These efficiency initiatives will allow Aryzta to capitalize on future growth and further improved business performance.

For additional information please read the Company’s PDF file below (227 KB):

20240814-ARYZTA-H12024.