Earnings at baked goods supplier Aryzta have fallen by almost a third as the business looks to turn around its performance.
Its European business has been hit by soaring butter costs and some of its customers switching their sourcing, while the US division has been badly affected by problems at its Cloverhill operation, as well as increases in labour and distribution costs.
Cloverhill suffered efficiency and production issues when 800 experienced workers were forced to leave the business after an audit of a third-party agency that supplied staff for the site revealed problems with documentation.
Aryzta has since sold Cloverhill to Twinkies maker Hostess brands, and its Cicero facility to Bimbo Bakeries USA as part of disposals that it said are on track to top €450m.
Announcing its financial results for the six months to 31 January 2018, Aryzta also said it had agreed the sale of Signature Flatbreads to the Eid family.
Revenue across the group has fallen 6.3% to €1,787m, but rose 1.3% when Cloverhill is excluded from the figures. Aryzta Europe revenue increased 0.7% to €868.3m.
However, EBITDA plunged 29.6% to €161.3m, while the company’s EBITDA margin fell 2%. Underlying net profit fell 53.5% to €50.9m.
“We are actively implementing a range of measures to improve our EBITDA. We are in a multi-year turnaround programme,” said Aryzta chief executive Kevin Toland, who joined the business last year following the departure of CEO Owen Killian, chief financial officer Patrick McEniff, and Americas CEO John Yamin.
“Under our new leadership team, we are reshaping the group’s focus on our core B2B frozen bakery customers, improving operational efficiencies and deleveraging the balance sheet.”