Irish-Swiss food company Aryzta is shifting its focus back to just supplying businesses and ditching its foray into retailing after reporting a record billion dollar annual loss.
Aryzta, which supplies baked goods to stores and fast food restaurants worldwide, warned in January that its strategy of selling Otis Spunkmeyer products directly to retail customers had backfired.
The news wiped a third off its shares that day.
The company has since brought in new management to turn the business around and announced its strategy today, two weeks after its new chief executive Kevin Toland took up his role.
"Aryzta is committed to improving revenue growth by refocusing on its core strengths as a global leader in B2B (business-to-business) frozen bakery and European food solutions," it said in a statement.
Aryzta, known for its Cuisine de France range and Otis Spunkmeyer brand, reported a loss of €907.8m compared with a profit of €67m last year.
The loss was mainly down to €860m of charges related to marking down the value of its North America and Germany businesses. On an underlying basis, its full-year profit fell 42.5% to €179m.
Aryzta's troubles started when it decided to sell its Otis Spunkmeyer muffins and cookies directly to retail customers.
At the same time, it was also making rival products for other companies.
Some took exception to Aryzta's move into retailing and cancelled their production contracts with the Swiss company.
The loss of production volume in North America, increased spending to boost its retail presence and a rise in labour costs hit its profit, all at a time its Otis Spunkmeyer products were not selling as well as expected.
For North America, Aryzta booked a goodwill writedown of €492m, an impairment charge of €139m related to the damage to its relationships following the move into retail and a charge of €126m related its factories.
The company said about 800 experienced workers had left its Cloverhill factories, acquired in 2014, after a federal audit of a third-party agency that supplied the staff revealed inadequate documentation.
"While the Cloverhill business had been profitable every month since its acquisition, following this disruption these locations incurred €16.3m of losses during June and July 2017, which is expected to continue to impact the business during 2018," it said.
For the current financial year which started on August 1, the company said its best current estimate for earnings before income, tax, deprecation and amortisation was to be broadly in line with the previous year, when EBITDA was €420.3m.
The frozen dough maker also said it had agreed a new five-year unsecured refinancing of €1.8 billion.
Shares in the company closed 8.76% higher in Dublin trade today.