Aryzta AG :YZA-DE: Earnings Analysis: For the six months ended July 31, 2017 : October 6, 2017

Aryzta AG reports financial results for the half-year ended July 31, 2017.


  • Summary numbers: Revenues of EUR 1,890.73 million, Net Earnings of EUR -782.82 million.
  • Gross margins narrowed from 32.00% to 27.08% compared to the same period last year, operating (EBITDA) margins now 10.12% from 16.14%.
  • Change in operating cash flow of -54.07% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-07-31 2017-01-31 2016-07-31 2016-01-31 2015-07-31
Relevant Numbers (Semi-Annual)
Revenues 1890.73 1906.04 1918.86 1960.01 1430.76
Revenue Growth (YOY) -1.47 -2.75 34.11 -17.97 -47.13
Earnings -782.82 -157.06 26.44 54.4 -78.55
Earnings Growth (YOY) -3060.28 -388.69 133.66 25.8 -198.63
Net Margin -41.4 -8.24 1.38 2.78 -5.49
EPS -8.82 -1.77 0.3 0.61 -1.14
Return on Equity -41 -6.54 1.09 2.22 -3.4
Return on Assets -25.35 -4.63 0.76 1.6 -2.22

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, YZA-DE’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if YZA-DE’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by -0.80% and earnings by -398.43% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 32.00% to 27.08%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 16.14% to 10.12% in this time frame. For comparison, gross margins were 29.67% and EBITDA margins were 12.02% in the previous period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

YZA-DE’s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days are now -193.01 days from -11.26 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

YZA-DE’s year-on-year change in operating cash flow of -54.07% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History

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Company Profile

Aryzta AG engages in the production and distribution of baked goods. It operates through the following business segments: Food Europe, Food North America, and Food Rest of World. The Food Europe offers market positions in the European specialty bakery market. The Food North America segment involves in the specialty bakery market in the United States of America and Canada. The Food Rest of World segment consists of businesses in Brazil, Australia, New Zealand, Japan, Malaysia, and Singapore. The company was founded on April 4, 2008 and is headquartered in Zürich, Switzerland.

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