German food processing company shares Hellofresh Shares of fast-food giant General Electric Co. jumped Tuesday after the company reported better-than-expected second-quarter profit and said its ready-to-eat meals business had seen rapid growth.
HelloFresh shares rose about 20% in morning trading, but pared gains to rise 10% to 5.93 euros ($6.48) as of 8:30 a.m. ET.
HelloFresh Stock Trading Tuesday, August 13, 2024
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 statement released Tuesday. The figure was down 23.7% from the same period last year, but beat analysts’ expectations of 123 million euros surveyed by LSEG.
Hello Fresh said its revenue rose 1.7% in the third quarter to €1.95 billion.
The company noted that its results received a boost from healthy performance in its ready-to-eat meal delivery business, which saw 50.2% year-on-year growth in the first half of 2024.
HelloFresh has made expanding more aggressively into the ready-to-eat category a key priority as demand for meal kits, which encourage people to cook with ingredients provided through a weekly subscription plan, has fallen after COVID-19 lockdowns eased in 2021.
HelloFresh acquired Factor, a company that makes ready-to-deliver meals, for up to $277 million in 2020 in an effort to expand into the category.
The company said Tuesday that the expansion of its ready-to-eat meals category, along with growth in its average order value in North America and international markets, “more than offset the decline in order volumes in the meal kits product category” in the first half of 2024.
However, HelloFresh also said this increase in ready-to-eat production was taking a significant portion of costs off total 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 have suffered a sharp decline over the past year amid rising interest rates and doubts about whether the company’s business model can keep up with the sharp growth rates seen during the pandemic. In the past 12 months, HelloFresh’s stock price has fallen 75%.
In March, HelloFresh shares fell 42% to see their worst session ever after the company disappointed investors with its 2024 full-year earnings outlook.
Analysts at UBS said at the time that despite the risks already raised around HelloFresh's guidance, the company's outlook was “significantly worse” than expected.
