SCHLIEREN, SWITZERLAND — Aryzta AG remains in “measured crisis mode,” Kevin E. Toland, chief executive officer, said during an Oct. 6 conference call to discuss fiscal 2020 results.
“That’s a better crisis approach, having the right focus and data points, being agile and adaptable, and having very short frequent communication lines,” Mr. Toland explained.
He said Aryzta has about 15% of its capacity back at two plants still on pause and 2,000 people on furlough. By comparison, at the peak of the coronavirus (COVID-19) pandemic in April, Aryzta had almost 20% of its plants shuttered, half its capacity was shut down and 5,000 people were either on furlough or short-time working, he said.
The COVID-19 crisis materially impacted the performance of Aryzta in all channels and geographies in fiscal 2020.
In the year ended July 31, Aryzta North America EBITDA decreased 32% to €66.7 million ($78.5 million), down from €98 million in fiscal 2019. Meanwhile, Aryzta North America revenues in fiscal 2020 decreased 9.7% to €1.26 billion ($1.49 billion) from €1.39 billion a year ago.
Mr. Toland said foodservice has been the area most affected by COVID-19, though he noted Aryzta experienced a small recovery at the back end of the fourth quarter.
“There still is, what I’d call, a lack of eating out-of-home and a daypart problem in terms of morning and lunch with people working from home,” he said. “And also reduction in the institutional sector, for example, education. And it’s still down. It’s likely to stay down through the medium term. For example, the education sector in North America, only 50% of students are, at this point, estimated to be back in a classroom as opposed to pretty much across the board in Europe.”
Another area of Aryzta’s business that has been adversely affected by COVID-19 is the quick-service restaurant business. Mr. Toland described the recovery of the QSR business as “okay,” noting some slight improvement in the fourth quarter, although results are still down.
“Very much the focus has been on drive-thru, online delivery versus dine-in, simplification in the menu, and the offer has been a key factor,” he said. “And a lack of return to work in many cities is still an inhibitor.”
A positive for Aryzta during this period has been the company’s retail business.
“Retail has been positive, with a relatively strong performance all the way through,” Mr. Toland said. “We’re up year-on-year in both Q3 and in Q4. Remember in H1, we talked about we had a strong pipeline going into the market at the end of H1 and into H2, and it’s continuing to do well. And the focus for ‘21 continues to build on that progress.”
On Sept. 16, Urs Jordi took over as chairman of Aryzta. Mr. Jordi’s appointment was one of several changes announced as part of the company’s extraordinary general meeting. Since that time, Mr. Jordi said Aryzta has initiated several moves.
“Your board has established a special subcommittee to deal with strategic M&A across the group,” Mr. Jordi said. “It’s very positive to note that since Sept. 16, we continue to receive unsolicited expressions of interest to acquire parts of the Aryzta Group; these are in addition to the already known public earlier interests.
“The extraordinary general meeting has endorsed a change in direction for the company and the board, and we will conduct a full assessment of all strategic options available, internal and external, acting always in the best interest of Aryzta and its stakeholders. And this process will continue to evaluate all unsolicited expressions of interest received.”
During the conference call, Mr. Jordi stressed his belief that Aryzta has “a long, positive future.”
“My vision for Aryzta is one that is less complex, more focused and structured around its core markets and core businesses,” he said. “This will improve the sustainable financial performance and reduce its current excessive debt significantly. This business case is well supported by strong customer relationships, well-invested assets and experienced employees around the world.
“This facilitates calm, well-thought and orderly decision-making process around any change involving disposals, reorganization and debt repayment plans. This will allow Aryzta quickly to refocus on organic growth within our core markets and core businesses. I’m fully convinced that Aryzta has great potential, and we will do our utmost to put the company back on the road to success.”
Overall, EBITDA at Aryzta decreased 15% in fiscal 2020 to €260.2 million. Revenues fell 13% to €2.93 billion.