By Paolo Laudani and Isabel Demetz
(Reuters) - German food delivery company HelloFresh (OTC:HLFFF) delivered on Thursday better-than-expected quarterly results, helping easing investor concerns even as customers ordered fewer meal kits and the company ramped up spending on its fledging ready-meal business.
First-quarter adjusted core profit (AEBITDA) came in at 16.8 million euros ($17.99 million), down sharply from 66.1 million in the same period last year. That was above analysts' average estimate of 3.6 million euros.
Revenue at constant currency rose 3.8% to 2.09 billion euros, slightly higher than analysts' average estimate of 2.02 billion euros.
But revenue at a constant currency from its core meal-kit business fell 6.9% to 1.57 billion euros, while its smaller ready-to-eat operations generated 502.6 million in revenue, up 56%.
CFO Christian Gaertner said in a call with analysts the company is expecting a "slightly softer" revenue growth in the second quarter.
The Berlin-based company has been expanding its fledging ready-meal business to try and offset falling meal-kit subscriptions as people eat at restaurants after the end of pandemic-related restrictions.
But two profit warnings since November have raised worries among investors about slowing sales growth, higher marketing expenses and the costs of ramping up the ready-to-eat business.
The better-than-expected profits coupled with the company confirming its outlook helped soothe some of those concerns on Thursday.
"It is very early days in HelloFresh re-building investor trust in guidance, but we think Q1 is a good start," Barclays (LON:BARC) said in a note.
Shares were up 1.1% at 0906 GMT. They have lost about 80% of their value since mid-September.
The company will focus on retaining customers, rather than getting new ones, CEO Dominik Richter said on the call.
"The most surprising thing about it is that there are no surprises," said Christian Reindl, portfolio manager at Union Investment, about the results. Union holds a 2.81% stake in the company.
($1 = 0.9340 euros)