Frozen Food Company Nomad Overcomes ERP Hiccups With Solid Q3 Profit Growth, Cools 2024 Expectations

Nomad Foods Limited NOMD shares are trading higher on Thursday.

The company reported third-quarter sales growth of 0.8% year-on-year to 769.6 million euros. Revenue of $845.87 million missed the consensus of $862.89 million.

The company registered organic revenue growth of 0.3% with volume growth of 0.7%, despite an approximate 2.5% temporary headwind related to greater-than-expected ERP disruptions.

Adjusted EBITDA increased 19.0% to 166 million euros. Gross profit increased 14.5% to 248 million euros. Gross margin increased 390 basis points to 32.3% due to supply chain productivity, positive product mix performance as it invested in its core most profitable Must Win Battles, and lower than planned promotional investment as it curtailed in-market support to manage inventory during ERP transition.

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“The European Frozen category remains healthy, and our market share returned to volume and value growth this quarter as innovation, marketing and merchandising investments yield positive results,” said Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer. 

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “The new commercial flywheel and innovation framework that we adopted last year is bearing fruit and validated by our return to market share growth, notwithstanding the curtailed support levels due to ERP implementation in the period”.

The company reported adjusted EPS of 0.55 euros, with $0.60 in U.S. dollars beating the street view of $0.58.

Outlook: Nomad Foods lowers its FY24 organic revenue growth forecast from 3-4% to 1-2%, citing ERP-related challenges in the third quarter and more conservative growth expectations for the rest of the year.

The company continues to expect full-year cash flow conversion in the range of 90% to 95% but lowered its adjusted earnings outlook for the full-year.

Price Action: NOMD shares are trading higher by 7.14% to $17.41 at last check Thursday.

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