January 25, 2018 / 7:32 AM / a year ago

UPDATE 2-Baker Aryzta's profit warning hits shares in blow to new team

* Sees like for like EBITDA 15 pct below last year

* Brexit-related pressures hitting UK business

* Shares slump 22 pct, set for worst day in a year (Adds analysts’ comments, share move)

By Thyagaraju Adinarayan

Jan 25 (Reuters) - Speciality baker Aryzta AG sharply cut its 2018 core profit forecast on Thursday due to ongoing weakness in European and U.S. markets, knocking its shares by as much as 22 percent.

The Swiss-Irish company’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.

Aryzta, 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 percent on a like-for-like basis. In November Aryzta forecast 2018 EBITDA to be broadly in line with last year.

Chief Executive Kevin Toland also started only 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.

Baader Helvea analyst Andreas von Arx said the credibility of the new management “took a crack”, while Kepler Cheuvreux analyst Jon Cox said in a note that the profit warning was “particularly painful” as it was under their watch.

Von Arx said it was the magnitude of the EBITDA shortfall that had been a surprise and not the fact that it would be behind 2017, adding that he expects Aryzta’s share price to remain low until a sustainable stabilization in profitability.

Aryzta’s shares were down 20.3 percent to 30.09 Swiss francs at 0850 GMT and were heading for their worst single-day percentage decline since Jan. 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 percent 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 United States. (Reporting by Thyagaraju Adinarayan and Anna Serafin in Gdynia; Editing by Amrutha Gayathri and David Goodman)

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