Nomad Foods: Reports Q2-2023 Financial Results

Feltham / UK. (nom) Nomad Foods Limited (Goodfella’s Pizza, Iglo, Findus and other brands) reported financial results for the three and six month periods ended June 30, 2023. Key operating highlights and financial performance for the second quarter 2023, when compared to the Q2-2022, include:

• Reported revenue increased 6.9 percent to EUR 745 million
• Organic revenue growth of 8.6 percent
• Reported Profit for the period of EUR 49 million
• Adjusted Ebitda increased 4.5 percent to EUR 132 million
• Adjusted EPS remained unchanged at EUR 0.40

Management Comments

Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, «Nomad Foods maintained sales momentum from the first quarter of the year into the second quarter. We grew organic sales by 8.6 percent and Adjusted Ebitda by 4.5 percent year-on-year, while keeping our Gross Margin stable. Furthermore, we completed our preparations and planning to kick off a comprehensive A+P investment plan next quarter, and we expect to see visible improvement in our volume and market share performance in the second half of the year. Building on this strong first half performance, second quarter share buyback, and our improving expectations for the second half, we are raising our Adjusted EPS guidance range to EUR 1.54 to EUR 1.57 from our previous range of EUR 1.52 to EUR 1.55. Furthermore, we maintain our guidance for Adjusted Free Cash Flow conversion in the range of 90 percent to 95 percent for 2023, generating approximately EUR 250 million of Adjusted Free Cash Flow.»

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, «Nomad Foods again reported a strong performance this quarter. We delivered strong organic revenue growth while protecting our Gross Margin through pricing and cost discipline. Additionally, we repurchased nearly EUR 53 million in shares this quarter, and we continue to believe share buybacks are an important component of our capital allocation strategy representing tremendous value for our shareholders. Nomad’s leading brands, great people, and world-class supply chain continue to drive great results, and the operational plans we built for this year are coming to fruition which gives us confidence to revise our guidance. As we look ahead to the balance of the year, we are excited about the renewed investment in A+P to drive long-term growth and recapture market momentum. Frozen food remains an excellent value for all consumers, and we see plenty of opportunities ahead. We are investing in sustainable long-term growth and remain focused on driving value for our shareholders.»

Second Quarter of 2023 results compared to Q2-2022

• Revenue increased 6.9 percent to EUR 745 million. Organic revenue growth of 8.6 percent was comprised of a 9.4 percent decline in volume/mix offset by a 18.0 percent increase in price.
• Gross profit increased 6.8 percent to EUR 210 million. Gross margin remained unchanged at 28.2 percent, linked to the successful recovery of higher input costs through pricing.
• Adjusted operating expenses increased 9.7 percent to EUR 101 million.
• Adjusted Ebitda increased 4.5 percent to EUR 132 million due to the aforementioned factors. Adjusted Profit for the period decreased 2.4 percent to EUR 69 million due to the impact of the refinancing we performed in November 2022, resulting in higher cash interest payments on a portion of our debt.
• Adjusted EPS remained unchanged at EUR 0.40, reflecting a small decrease in Adjusted Profit after tax. Reported EPS decreased 34.9 percent to EUR 0.28.

First Six Months of 2023 results compared to H1-2022

• Revenue increased 6.3 percent to EUR 1,520 million. Organic revenue growth of 8.3 percent was comprised of a 8.5 percent decline in volume/mix offset by a 16.8 percent increase in price.
• Gross profit increased 8.2 percent to EUR 434 million. Gross margin increased 50 basis points to 28.6 percent, linked to the successful recovery of higher input costs through pricing, and a benefit in the cost of goods sold from the tail end of our cover positions from 2022.
• Adjusted operating expenses increased 7.9 percent to EUR 201 million.
• Adjusted Ebitda increased 7.9 percent to EUR 279 million. Adjusted Profit for the period increased 2.5 percent to EUR 149 million due to the aforementioned factors.
• Adjusted EPS increased 2.4 percent to EUR 0.86, reflecting the increase in Adjusted Profit after tax. Reported EPS decreased 30.7 percent to 0.52.

2023 Guidance

For the full year 2023, management is raising Adjusted EPS guidance to EUR 1.54 to EUR 1.57 from EUR 1.52 to EUR 1.55 . Our full-year guidance assumes mid-single-digit organic revenue growth and Adjusted Cash Flow conversion in the range of 90 to 95 percent. These are both unchanged from our last update in May.