Aryzta, the Swiss-Irish maker of par-baked pastries and breads, said it plans to find as much as €60 million of gross savings over the next three years in order to boost its earnings margins as its revenues at a faster rate than the wider baked goods market.
The company behind the Cuisine de France brand in Ireland will likely have to spend €20 million-€30 million on further upgrading its IT infrastructure in order to deliver some €40 million-€60 million of gross cost cuts, it said on Wednesday as it announced new medium targets. This would result in net savings of €20 million-€20 million.
It aims to improve its earnings before interest, tax, depreciation and amortisation (Ebitda) margin to more than 15 per cent over the three years, compared to 14.6 per cent last year.
Aryzta said that it aims to further reduce its debt over the period, including the redemption of its final €155 million of hybrid debt-equity instruments, in order to return to paying dividends for the first time since 2017. It aims to reduce its net debt to 1.5-2 times Ebita from a ratio of 2.8 last year, but also look at bolt-on merger and acquisition opportunities in core markets – which span Europe to southeast Asia, Australia and New Zealand
“Aryzta’s mid-term targets reflect our strategy to focus on innovation-led organic growth and premiumisation, continuous business process improvements and a comprehensive cost discipline program,” said Aryzta’s new chief executive, Michael Schai, who took on the role in January.
“Our strategy is targeting to generate sufficient cash to further reduce debt levels, invest in innovation and return capital to shareholders. We envisage further improvements across all our financial metrics over our new plan. It also reflect our aim to be well positioned in our key markets and have sufficient financial strength to control our own destiny given the consolidation taking place in the bake-off sector.”
The company, which was formed in 2008 through the merger of Dublin-based IAWS and Swiss baking group Hiestand, saw its centre of gravity move from Dublin to Zurich in late 2020 under a boardroom coup in 2020, following years of weak performance following a series of debt-fuelled deals.
The company has been through major restructuring since then, including the sale of a troubled North American business and its Brazilian unit, debt reduction and a refocusing on product innovation.
