By Linda Pasquini
(Reuters) -German meal-kit maker HelloFresh on Thursday reported a smaller-than-expected decline in first-quarter core earnings, sending its shares to a three-month high, as it saw customers return to its service.
Quarterly adjusted core profit (AEBITDA) fell 33.4% to 66.1 million euros ($73.05 million) but beat analysts' average estimate of 47.5 million euros in a company-provided poll, despite high seasonal marketing costs.
Food delivery companies, which benefited from a spike in demand during the pandemic even as new players entered the market, are seeking ways to manage rising margin pressures as they may not be able to pass higher prices onto consumers cutting back spending.
In an analyst call, HelloFresh said it expected the number of active customers to drop to 7.7 million in the current quarter, after it saw a quarter-on-quarter rise in the first three months of the year to 8.11 million, as demand slowed down over Easter holidays.
However, its shares were up 6.7% at 0826 GMT, at their highest level since mid-January.
The toughest comparison period has now passed, analysts at Jefferies noted, and "margin should edge higher through the year" despite expected higher marketing investments.
Marketing expenses as a percentage of revenue, excluding share-based compensation costs, rose by 2.8 percentage points to 20.4%, as spending normalized compared to a year earlier, the company said.
HelloFresh, which seeks to further drive profitability in its meal-kit business while expanding its newest ready-to-eat (RTE) segment, aims to launch RTE in the Benelux region towards the end of the third quarter this year and in other European markets in 2024, Chief Executive Dominik Richter said in a media call earlier in the day.
Revenue rose 5.3% to 2.02 billion euros in the first quarter, close to analysts' estimate of 2.03 billion euros. Sales were driven by growth in the North America segment, which from the start of this year has included the company's Canadian operations to save on sourcing of ingredients, packaging, and logistics.
The company confirmed its full-year forecast for an AEBITDA of 460 million-540 million euros, and revenue growth of between 2% and 10% on a constant-currency basis.
It expected constant-currency revenue growth of 1%-2% in the second quarter.
($1 = 0.9049 euros)