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Nomad Foods Limited (NASDAQ: NOMD) reported a modest revenue growth of 0.8% for the third quarter of 2024, reaching €770 million. This growth was underpinned by organic revenue growth of 0.3% and a volume increase of 0.7%, despite facing a significant 2.5% headwind due to unexpected ERP disruptions.
The company’s adjusted EBITDA surged by 19% to €166 million, highlighting the effectiveness of its growth strategy. Adjusted EPS also saw a remarkable increase of 28%, rising to €0.55, reflecting the company’s ability to maintain profitability amidst operational challenges.
The company’s gross profit jumped by 14.5% to €248 million, with a notable gross margin increase of 390 basis points to 32.3%. This improvement was attributed to supply chain productivity and a favorable product mix, as Nomad Foods invested in its high-margin Must Win Battles. Despite inflationary pressures, adjusted operating expenses rose by only 6.8% to €107 million, demonstrating disciplined cost management.
CEO Stéfan Descheemaeker expressed satisfaction with the quarter’s performance, emphasizing the company’s ability to accelerate profitable volume growth. He noted that the European frozen food category remains robust, and Nomad Foods’ market share returned to growth, driven by investments in innovation, marketing, and merchandising.
Nomad Foods Reports Mixed Results for Third Quarter
Nomad Foods’ third-quarter performance exceeded expectations, particularly in terms of EPS. Analysts had anticipated an EPS of €0.51, but the company reported €0.55, marking a significant outperformance. This reflects the company’s ability to manage costs effectively and leverage favorable pricing strategies, despite the ERP-related challenges.
However, revenue fell short of expectations, with analysts forecasting €781.9 million, while the actual figure was €770 million. This shortfall can be attributed to the temporary ERP disruptions, which impacted service levels and sales. Despite this, the company managed to achieve positive organic revenue growth, showcasing its resilience and adaptability in a challenging environment.
The company’s focus on high-margin products and strategic investments in its core growth platforms contributed to its ability to outperform EPS expectations. The positive results underscore Nomad Foods’ capacity to navigate operational headwinds while maintaining financial stability and growth.
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Nomad Foods Adjusts Full Year 2024 Guidance, Lowers Expected EPS
Nomad Foods has adjusted its full-year 2024 guidance, primarily due to the ERP-related disruptions experienced in the third quarter. The company now expects organic revenue growth of 1% to 2%, down from the previous guidance of 3% to 4%. Similarly, the adjusted EBITDA growth forecast has been revised to a range of 3% to 5%, compared to the earlier range of 4% to 6%.
Adjusted EPS guidance has also been slightly lowered to a range of €1.72 to €1.77, implying growth of 7% to 10%, compared to the prior expectation of €1.75 to €1.80. Despite these revisions, Nomad Foods remains optimistic about its long-term prospects, with a focus on accelerating volume growth and market share recovery in the fourth quarter.
Management remains confident in the company’s commercial flywheel and innovation framework, which are expected to drive continued growth. The company plans to invest in marketing and innovation initiatives for the remainder of the year and beyond, aiming to capitalize on improved underlying trends and market conditions.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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