SCHLIEREN, SWITZERLAND — Although trading patterns were in line with guidance up until March 15, recent market conditions in connection with the coronavirus (COVID-19) have prompted Aryzta to alter its outlook.
“We cannot reasonably gauge what consequences will result from the situation as neither the duration nor the depth of this issue can be fully assessed at this point in time,” Aryzta said.
To address the situation, Aryzta said it is taking “decisive action to maximize cash, reduce costs and maintain a strong liquidity position.”
Specific actions include significantly reduced capital spend (including the suspension of all future capital projects), delivery of further operating cost reduction and efficiency, actively reducing capacity to meet demand, elimination of all discretionary costs, a reduction in labor costs, a reduction in hours/workforce in the countries most affected by COVID-19, accelerated consolidation and optimization of manufacturing capacity, the closing of two smaller plants in Europe and ongoing evaluation of further shuttering of plants and lines.
Aryzta added that Project Renew remains in full action, but future programs where more cash would be required have been postponed.
Aryzta remained steadfast in its commitment to health and safety, noting that the key priority of the company’s board and executive management is “to ensure the health and well-being of our colleagues, customers and suppliers during this challenging period.”
“We are continuously monitoring the situation with our key stakeholders and are actively assessing the consequences of recent government responses to COVID-19 within the different channels,” Aryzta said. “Our focus is to ensure the highest quality and product safety standards across all bakeries in full compliance with reinforced COVID-19 protocols.”
Aryzta said it has full business continuity plans in place and is taking action to implement flexible working policies and, where necessary, to adjust available capacity to the rapidly changing demand of the different channels.
The impact of COVID-19 on Aryzta’s various markets has been wide ranging. In Europe, quick-service restaurant (10% of European revenue) and foodservice operations have been “strongly impacted” by the “significantly reduced footfall following government-related restrictions,” Aryzta said. Retail, meanwhile, is performing well with a small uplift coming from this channel, the company noted.
Aryzta said a similar pattern is emerging in North America, with QSR and foodservice affected by COVID-19-related restrictions, partially offset by drive-thru service offerings or home delivery, which many restaurants and QSRs provide.
“Retail sales are still robust, and reorders are coming through the supply chain,” Aryzta said.
In the rest of the world, the foodservice channel, particularly in southeast Asia, has been adversely affected, Aryzta said, while the QSR segment in Brazil and the Pacific region are facing challenges due to the reduced footfall resulting from government-related restrictions.