Anika Begay
Shares of the German meal kit company HelloFresh jumped Tuesday after the company reported better-than-expected second-quarter profit and said its prepared meals segment saw rapid growth.
HelloFresh shares rose as much as 20% in morning trading but pared gains, rising 11% to 5.90 euros ($6.44) by 6:19 a.m. ET.
HelloFresh reported adjusted earnings before interest, taxes, depreciation and amortization of 146.4 million euros in the three months ended June 30, according to its earnings release on Tuesday. The figure was down 23.7% from the same period last year, but beat the 123 million euro forecast by analysts polled by LSEG.
According to HelloFresh, the company’s revenue increased 1.7% in the quarter, reaching 1.95 billion euros.
The company noted that its results were boosted by the strong performance of its prepared meal delivery business, which recorded 50.2% year-on-year growth in the first half of 2024.
HelloFresh has made its more aggressive expansion a key priority in the prepared meals category, as demand for its meal kits, which encourage people to cook with ingredients delivered via a weekly subscription, has waned as Covid-19 lockdowns eased in 2021.
In 2020, HelloFresh acquired Factor, a company that prepares ready-to-eat meals for delivery, for $277 million in an effort to expand in the industry.
The company said Tuesday that the expansion of its prepared meals category, along with average order value growth in North America and international markets, “more than offset a decline in order volumes in the meal kit product category” in the first half of 2024.
However, HelloFresh also said that this increase in ready-to-eat meal production was reducing some of the cost of overall sales. The group’s contribution margin fell to 24.3% in the second quarter of 2024, down from 28.4% in the same period last year.
HelloFresh shares plunged as much as 42% in March, posting their worst day ever after the company disappointed investors with its 2024 full-year earnings forecast.
At the time, UBS analysts said that despite the risks already highlighted around HelloFresh’s forecast, the company’s prospects were “much worse” than expected.
