Birds Eye and Findus owner Nomad Foods has continued to slow its decline in the UK as group sales recorded organic growth for the second quarter in a row as the group pushed through price increases.
Organic revenues increased 3.5% in the second quarter to €458m, driven by a 0.8% jump in volumes and a 2.7% rise in prices, with the growth falling to just 0.5% after accounting for the impact of currency exchange across its markets.
Nomad said price hikes in the UK – a result of post-Brexit inflation – accounted for the majority of the movement as it lowered the amount of promotions in supermarkets after heightened activity in the first quarter.
The group added that the UK strategy was showing “good progress”, with response to price increases in line with expectations.
Sales in the UK improved for the fourth consecutive quarter, down just 1.1% in the three months to 30 June, compared with a 5.8% in the second quarter a year ago.
A 20% jump in German sales and a 12% increase in Italy drove group-wide growth.
Nomad CEO Stéfan Descheemaeker said: “Second quarter results were strong with 3.5% organic growth and 90 basis points of gross margin expansion.
“We continue to deliver against our strategic agenda with a clear focus on growing profitable market share within our core categories. Based on our year-to-date performance and visibility into the back half of the year, we now expect 2017 EBITDA to be in the upper half of our previous range.”
Adjusted EBITDA increased 2% to €79m in the period, with group raising full year expectations from the €315m to €325m range to €320m to €325m.
Pre-tax profits in the second quarter were €25.2m, compared with a €8.2m loss a year ago.
Nomad chairman and co-founder Noam Gottesman added: “Our strategy continues to deliver strong results. The ongoing improvement in our fundamentals and robust cashflow generation place us in an attractive position. We repurchased 5% of our outstanding shares through an accretive transaction during the second quarter and remain committed to generating shareholder value through consolidation within European frozen, as well as our broader ambitions.”
First-half revenues decreased 1.4% to €989m as a result of currency headwinds, with organic growth of 2.2%. Adjusted EBITDA decreased 5.4% to €168m as prices increases were offset by currency-driven inflation, higher promotion levels in the UK and increased investment in advertising spending.
Nomad also announced it had appointed Mohamed Elsarky to replace Brian Welch on its board. Welch, a director of Nomad since June 2015, resigned to focus on a new investment at Pershing Square Capital Management, where he is a partner. Elsarky was CEO of Godiva Chocolatier from 2014 to earlier this year. His previous roles include president of Northern Europe for United Biscuits and a variety of executive positions with Kellogg.
Nomad Foods, created in 2014 by US tycoons Martin E. Franklin and Noam Gottesman with ambitions to become a global food group, acquired Birds Eye owner Iglo Group for €2.6bn (£1.8bn) as its anchor investment in April 2015 before bolting on Findus later that year.
It has struggled with decline sales since taking on board the frozen food giants in a challenging market.
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