Birds Eye owner Nomad Foods has downgraded its profit guidance after sales were hit by a flawed implementation of new software.
Nomad said sales temporarily fell by about 2.5% due to “greater than expected ERP disruptions in certain markets” in the third quarter.
Enterprise resource planning (ERP) is software used by companies to organise their operations but is notorious for causing disruption. In 2021, similar issues at Walkers led to a multi-month crisp shortage.
CEO Stéfan Descheemaeker said the impact was “greater than anticipated” but service levels are now returning to normal levels.
The impact has caused it to lower its organic revenue growth from 3-4% to 1-2% for the year. Adjusted EBITDA is now expected to grow in a 3-5% range versus a 4-6% range previously.
The announcement came as Nomad posted its third quarter results. Revenue was up 0.8% to €770m due to volume growth of 0.7%. After a rocky start to the year, volumes for the first nine months of the year are now down just 0.1% compared to 2023.
“The results this quarter are impressive given greater than anticipated headwinds related to ERP implementation that we have faced,” said Descheemaeker.
Gross profits also rose to €248m after margins hit a “record-high” of 32.3%.
Descheemaeker said revenue growth management, productivity programmes, and lower than planned promotional investment had fuelled margin expansion. “This is evidenced by our record-high gross margin of 32.3% this quarter, allowing us to invest back into our business.”
Last month, Descheemaeker called for the food industry to face higher taxes to tackle obesity, as recommended in a Lords inquiry.
“We support the idea of a tax that promotes reformulation and innovation,” he wrote in the Grocer. “A tax should be based on the HFSS classification, which looks at the total nutritional profile of a product, taking a science-based approach that follows the UK government’s nutrient profiling model.”
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