Dive Brief:
- Aryzta reported a 7.5% decline in fiscal first-quarter revenues to €462.5 million ($489.1 million) for its North American division, Food Business News reported.
- The company attributes the revenue decline to a 5.7% decrease in volume for the quarter, due to Aryzta renewing long-term contracts that ended during the previous fiscal year. Excluding those contract renewals, sales dipped by 1.9%.
- The company said it will replace those lost volumes with a "solid pipeline of new food items. Aryzta’s brand roll-out continues to gain listings, in line with the phased development program," according to Food Business News.
Dive Insight:
These contract renewals also weighed on the results of Aryzta's previous earnings reports. In its fiscal 2016 results, Aryzta said underlying revenue growth would have been 22% excluding those contract renewals.
Judging by these financials, once Aryzta can move beyond the renewal period, the company should return to revenue growth. In this most recent quarter, underlying revenues still dipped slightly even without the impact of the contract renewals, which is a starkly different performance than fiscal 2016.
But Aryzta, a producer of baked goods and frozen specialty foods, has leeway for continued confidence in the company's future performance. The company has invested in upgrading to more modern bakeries, building out its innovation pipeline and promoting iconic brands like Otis Spunkmeyer, all of which help the company align with the indulgence-driven baked goods purchases consumers make today.