HelloFresh lowers profit forecasts due to higher investment costs

Meal box supplier HelloFresh has warned its profit margin will be lower than expected, as it will invest heavily in increasing its production capacity in the coming months.

Record quarter

In the second quarter, HelloFresh recorded a record turnover of 1.56 billion euros: the meal package company received almost 31 million orders between April and June, representing an increase of 71.2 % year-on-year. Adjusted gross operating profit amounted to 157.8 million euros, which corresponds to a margin of 10.1 %.

HelloFresh now investing heavily in expanding its capacity and offering: in the course of the second quarter, it opened new distribution centres in Canada and the United States. Three more will be added in the coming months in Australia, Germany and – again – the US. The company has also reached an agreement to acquire Youfoodz, an Australian producer of ready meals. This is the second acquisition in that segment, after Factor75 at the end of last year.

In the United States, the company introduced HelloFresh Market early this month, allowing customers to add a range of individual basic products to their meal package from now on. The concept was first extensively tested in the Benelux and approved. “I am very proud that Belgium pioneered HelloFresh Market. Based on the results and success, the range will be further expanded to more than 500 products in the rest of 2021, including a box of Belgian beers,” Pauwel Wiertsema, CEO HelloFresh Benelux, says.

Higher costs

For the full year, HelloFresh now expects revenue growth (at constant currency) between 45 and 55 %. Until now, the company had assumed a growth of 35 to 45 %.

The proposed adjusted profit margin of 10 to 12 % will be reduced to 8.25 to 10.25 %. HelloFresh expects higher production costs due to the accelerated expansion of production capacity, because the new production sites cannot yet be fully used. In addition, the company wants to accelerate its technology and data teams. These investments in the infrastructure and the platform are necessary to make the medium-term growth ambitions possible.