HelloFresh continues growth, but profit margin under pressure

Although meal-kit delivery company HelloFresh saw its revenue increase substantially again over the past quarter, profitability fell sharply due to large investments and increased costs. 

More customers, more orders

In the past three months, revenue increased by almost 46 per cent to 1.4 billion euros. HelloFresh processed 27.6 million orders, over 41 per cent more compared to the same period last year. The number of active customers grew from 5 million to 6.9 million.

The meal-kit delivery company continues to invest in expanding its production capacity and its entry into new markets. In July, the company launched in Norway, and since October, HelloFresh is also active in Italy. The acquisition of YouFoodz, the largest producer of ready meals in Australia, is fully completed, and recently HelloFresh also took a 10 per cent stake in its Russian peer Chefmarket.

“With all those investments, we maintain the focus on our medium-term sales target of 10 billion euros and are well on the way to becoming the leading global player in ‘food solutions'”, says Dominik Richter, co-founder and CEO of HelloFresh.

Costs increase

The significant investments did weigh on the company’s profitability. Adjusted gross operating profit (adjusted EBITDA) fell by more than 30 per cent to 79.8 million euros. The adjusted EBITDA margin shrank from 11.8 to 5.6 per cent. Besides the high investment costs, the return to a ‘more normal summer season’ and, to a lesser extent, a certain form of inflation in specific cost categories played a role in this, says HelloFresh.

For the whole of 2021, the company now expects sales growth of 57 to 62 per cent. Until now, HelloFresh counted on an increase of 45 to 55 per cent. The profit forecast remains unchanged: the adjusted EBITDA margin should be between 8.25 and 10.25 per cent.