Swiss-Irish baked goods maker Aryzta today sharply cut its 2018 core profit forecast due to ongoing weakness in European and US markets, knocking its shares by as much as 22%.
Aryzta's warning comes two weeks after it announced the appointment of a new chief in North America, where issues with undocumented workers and a failed strategy led to a $1 billion net loss in 2017.
The company, whose brands include Otis Spunkmeyer and Cuisine de France, said it expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) to fall by 15% on a like-for-like basis.
In November Aryzta had forecast that its 2018 EBITDA to be broadly in line with last year.
Chief executive Kevin Toland only started in September last year as part of sweeping changes at the top of Aryzta and analysts said the profit warning was a blow to the new team.
Aryzta's shares were heading for their worst single-day percentage decline since January 24, 2017, the day it issued a major profit warning for last fiscal year.
Aryzta said underperformance in Europe was likely to account for about 20% of the shortfall relative to previous expectations, in stark contrast with its view in November, when it trumpeted broadly based growth across the region.
It said Brexit-related pressures were hurting its British business and higher distribution and labour costs were denting profit in the US.
Aryzta's chief executive Kevin Toland, said that while the company is facing "major challenges", its revenue remains resilient.
"The newly strengthened management team is now in place and fully focused on addressing those challenges," Mr Toland said.
"We are progressing the disposal of non-core assets and deleveraging programme which is a key component of our multi-year turnaround programme abd delivery of the €1 billion cash generation target," he added.
Shares in the company were sharply lower in Dublin trade today.
