Global bakery business Aryzta has reported that underlying earnings per share has fallen 20% compared to the previous year, following a review of five months of trading ending December 2016.

The majority of the underperformance is due to North American weakness compounding the anticipated decline in Europe because of the ongoing commissioning of a German bakery and the impact of Brexit, said the company.

Underlying revenue growth in North America tracked lower in Q2 than Q1. The underperformance in North America was due to reduced revenue and higher-than-expected labour inflation costs.

American bakery brand Otis Spunkmeyer, owned by Aryzta, has triggered co-pack volume losses earlier than anticipated, after launching into the foodservice sector in Europe in October 2014.

This resulted in significant negative operating leverage at the Cloverhill bakery facility, said the firm.

Owen Killian, CEO of Aryzta, said the performance in the current period was both unexpected and extremely disappointing.

“We know that it will take a recovery followed by a period of sustainable growth to re-establish investor confidence,” he said.

“The Aryzta board and management teams are committed to returning the business to solid performance and growth and dealing with the challenges presented.”