Nomad Foods’ Q2 Revenues Rise 0.5%, Profits Advance 3.4%
Nomad Foods’ sales for the second quarter ending on June 30, 2017, increased 0.5% to €458 million over the corresponding period the year before. Gross profit for the Feltham, England-headquartered frozen food company whose retail brands include Birds Eye, Iglo and Findus, amounted to €144 million. That was up 3.4% compared to the same quarter in 2016.
This is especially good news, as the company posted a loss during the second quarter of 2016, when revenues fell by 6.6% and gross profit declined by €8.8 million.
“Results were strong with 3.5% organic growth and 90 basis points of gross margin expansion,” said CEO Stéfan Descheemaeker about the Q2 2017 figures. “We continue to deliver against our strategic agenda with a clear focus on growing profitable market share within our core categories. Based on our year-to-date performance and visibility into the back half of the year, we now expect 2017 EBITDA to be in the upper half of our previous range.”
Noam Gottesman, Nomad Foods’ co-chairman and founder, commented: “Our strategy continues to deliver strong results. The ongoing improvement in our fundamentals and robust cash flow generation place us in an attractive position. We repurchased 5% of our outstanding shares through an accretive transaction during the second quarter and remain committed to generating shareholder value through consolidation within European frozen, as well as our broader ambitions.”
I'm especially pleased by our results this quarter in light of the heat wave that we experienced across Europe during the month of June, which had retailers stocking ice cream over savory frozen. Importantly, our business has shown a commensurate response during the months of July and August, as the weather has reverted to seasonal norms,” remarked Descheemaeker during an earnings conference call on August 24.
Based on our year-to-date performance and visibility through the rest of the year, Nomad Foods raised the low end of its guidance in expectation that 2017 adjusted EBITDA will be between €320 million and €325 million, which represents the upper half of its previous range.
“Our guidance continues to assume low single-digit organic growth for both the full year and the second half as we look to build on a momentum we have seen thus far in the year,” said the chief executive officer.
Q2 geographic performance closely resembled the trend charted in Q1.
“Our branded business in Germany grew 20%, while Italy was up 12%. These gains are being driven by a combination of in-market execution along with a strong response to improvements in our core frozen fish and vegetable lines,” said Descheemaeker.
“UK sales showed another quarter of sequential improvement as the consumer response to price increases has met our expectations,” he continued. “And I'm also pleased to report that France is moving to positive territory, growing 3% in the quarter, as the commercial integration between Iglo and Findus brands is now completed.”
Board of Directors Change
Meanwhile, Nomad has appointed Mohamed Elsarky to replace Brian Welch on its board of directors. Welch has resigned from the board after two years to focus on a new investment at his firm, Pershing Square Capital Management LP, where he is a partner.
Elsarky most recently served as chief executive officer of Godiva Chocolatier from 2014-17. He has vast experience within consumer goods including previous roles as president of Northern Europe for United Biscuits Group and a variety of key executive positions with the Kellogg Company. He has also served as an operating partner at Lion Capital LLP, a British private equity firm that specializes in investments in the consumer sector.