Food meal-kit delivery firm HelloFresh’s strong sales in the first quarter support a growing trend for convenience and fresh food, the German company said.
HelloFresh reported its first quarterly underlying operating profit since it listed on the Frankfurt stock exchange in 2017, citing robust performance in the United States, a key market, days after its US-based rival Blue Apron reported weak quarterly results.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the second quarter came in at €18.3 million (£16.9 million), compared with a loss of €3.9 million in the year-ago period.
Consolidated sales increased to €437 million in the second quarter, which represents a year-on-year increase of 37% and a currency-adjusted growth of 31.5%.
'A growing desire to cook food from scratch while following a balanced approach to eating'
The company’s CEO and co-founder Dominik Richter told FoodNavigator that its move into black meant it was making great strides in the mission to change the way people around the world eat.
“On the one hand we're seeing an increasing need for convenience,” he said. “People tend to have less time to think about what they'd like to eat for dinner, let alone go to the supermarket and buy the ingredients.
“On the other hand, we're seeing a growing desire to cook food from scratch while following a balanced approach to eating. HelloFresh combines both - from choosing recipes online and delivering them straight to your door to offering varied and tasteful dishes with pre-portioned ingredients with a good value for money.”
The company said it expected to deliver more than 250 million meals in 2019. Its shares surged as much as 18% after it announced said there was a “very good chance” it would make an operating profit this year and sustain and expand profitability in the years to come.
HelloFresh can “generate much higher profit levels than other e-commerce companies" because the company controls the entire value chain -- from branded retail to wholesale to logistics, Richter said.
Due to the strong first half of the year, HelloFresh narrowed its full-year forecast and now expects sales growth of around 28% to 30%. It narrowed its EBITDA margin forecast for the full year from -1.0% to 1.0%.
HelloFresh wants to change the way people eat
"From the beginning, it has been our mission to change the way people eat, enriching the lives of millions each day by enabling them to make significant savings, bringing families and friends together, and delivering wholesome, wholesome meals directly to their homes We can do this at a pace that few other growth companies can match, which drives us at HelloFresh and makes us proud, " added Richter.
“Against all skepticism, the company has (again and again) posted solid financials that underline that the business model is well on track,” JPMorgan analyst Marcus Diebel, wrote in a note.
Deutsche Bank analysts wrote that the HelloFresh results marked “a key turning point for the group”.