HelloFresh Shares Soar as Q2 Profit Surpasses Expectations, Ready-to-Eat Meals Drive Growth

HelloFresh shares surge after Q2 profit beats expectations. Ready-to-eat meal delivery business grows 50.2% year-on-year. Strategic shift and increased average order value offset declining meal kit volumes. Stock rises 11% despite challenging year.

Staff Editor August 15, 2024

HelloFresh Shares Surge on Better-Than-Expected Q2 Profit

Shares of German meal kit company HelloFresh experienced a significant boost on Tuesday following the release of its second-quarter financial results, which surpassed analysts’ expectations. The company’s stock price initially surged by as much as 20% during morning trading before settling at an 11% increase.

HelloFresh reported adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of 146.4 million euros for the second quarter. While this figure represents a 23.7% year-on-year decrease, it notably exceeded the analysts’ forecast of 123 million euros. The company’s revenues also saw a modest increase of 1.7%, reaching 1.95 billion euros for the quarter.

A key highlight of HelloFresh’s performance was the impressive growth in its ready-to-eat meal delivery business, which saw a 50.2% year-on-year increase in the first half of 2024. This segment has become a strategic focus for the company following the easing of Covid-19 lockdowns. HelloFresh’s acquisition of Factor in 2020 for up to $277 million has played a crucial role in expanding its presence in the ready-made meals market.

The company’s strategic shift towards ready-to-eat meals and growth in average order value in North America and international markets have helped offset the decline in meal kit order volumes. However, the increased production of ready-to-eat meals has impacted overall sales costs, resulting in a dip in the group contribution margin to 24.3% in Q2 2024, down from 28.4% the previous year.

Despite the positive market response to the Q2 results, HelloFresh’s stock performance over the past year has been challenging, with shares dropping nearly 76%. In March, the company’s stock plummeted 42% following a disappointing 2024 annual earnings outlook. UBS analysts noted that the firm’s outlook was “far worse” than anticipated, despite previously flagged risks.

As HelloFresh continues to navigate the evolving meal delivery landscape, investors and analysts will be closely monitoring the company’s performance and strategic initiatives in the coming quarters.