The booming ready meals division more than compensated for the weakness of HelloFresh's core business with cooking boxes at the start of the year.

"We are reporting our highest quarterly sales ever and significant growth in the average order value compared to the same period last year," said HelloFresh CEO and co-founder Dominik Richter on Thursday. The expansion of the product range is bearing fruit.

Group revenue increased by 3.8 percent to 2.07 billion euros from January to March, adjusted for currency effects. The contribution from cooking boxes shrank by 6.9 percent to 1.56 billion euros, while revenue from ready-to-eat (RTE) meals increased by 56 percent to 496 million euros. This segment is developing well and is on track to achieve its full-year targets, Richter said in a conference call. "RTE will remain the most important growth driver in 2024 and 2025."

On this basis, Hellofresh confirmed the forecast for the current financial year, which was cut last month. Group revenue is expected to grow by two to eight percent in 2024 and operating profit will be between 350 and 400 million euros.

COSTS PUT PRESSURE ON PROFITS - COURSE OF GROWTH CONFIRMED

The costs of the RTE expansion and seasonally high marketing expenses depressed the operating result at the start of the year to EUR 16.8 million from EUR 66.1 million. Although this figure is low in absolute terms, it is well above market expectations, commented analyst Sebastian Patulea from investment bank Jefferies. HelloFresh shares then went on a rollercoaster ride and were recently up four percent.

During the conference call, Richter acknowledged the cost-cutting course that has been adopted, which is intended to raise the operating profit margins in the cooking box and ready meals business to around ten percent each in the medium term. In addition, his company will focus on customer loyalty rather than customer acquisition in future. One building block for this is the bonus program launched at the end of 2023. In the past quarter, the average order value rose by 6.5 percent.

(Report by Hakan Ersen; with the assistance of Myria Mildenberger, edited by Ralf Banser. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)