By Paolo Laudani and Linda Pasquini
(Reuters) -HelloFresh reported better-than-expected second-quarter core earnings on Tuesday, sending its shares up as much as 23%, as the German meal-kit maker enjoyed strong growth in its ready-to-eat (RTE) unit.
With pandemic hobby cooking no more and growth in its staple meal kits dwindling since the end of the lockdowns, HelloFresh is betting on its fledgling ready-meal branch to sustain growth.
Adjusted earnings before interest, taxes, depreciation and amortization (AEBITDA) fell 23% to 146.4 million euros ($160 million) in the second quarter, but beat analysts’ average estimate of 123 million euros.
“The challenges on the cost side are finally being addressed and ready-to-eat continues to be a strong growth driver,” said Christian Reindl, portfolio manager at Union Investment, which holds shares in the Berlin-based company.
Shares pared gains and were up 10% at 5.94 euro at 0830 GMT.
Meal kits still represented the core part of the business, with a 72% share of revenue in the quarter.
RTE, however, should grow in the mid-term to reach a share of sales in the mid-thirties percentage range as it is rolled out in more European countries, CEO Dominik Richter said in a call with Reuters.
For the third quarter, HelloFresh expects AEBITDA to reach 30-50 million euros, down from 69 million euros a year earlier as it anticipates to spend more on marketing during the back-to-school season, it said in a call with investors.
It confirmed its forecast for the year.
The company will target high-quality customers and reduce price incentives for its meal kits, Richter said in a statement.
To reduce costs, HelloFresh is cutting production capacity for its main business in core market North America and ramping up automated fulfillment centres in Germany and Britain.
Opening up its infrastructure to third parties “is something that might become interesting” in the long term but is not an immediate goal, Richter said.
($1 = 0.9143 euros)
(Reporting by Paolo Laudani and Linda Pasquini; Editing by Himani Sarkar, Subhranshu Sahu, Rashmi Aich and Miral Fahmy)
