Feltham, England-headquartered Nomad Foods has reported a Q3 2019 revenue increase of 2% to €540 million. During the three-month period that ended on September 30, organic revenue growth of 2.5% was comprised of 4.0% growth in price and a 1.5% decline in volume/mix.
“Organic growth has been driven by continued momentum in our core portfolio and the contribution from new product initiatives in fish, vegetables and plant protein,” said Stéfan Descheemaeker, chief executive officer of the company whose retail brand assortment of frozen food products sold in Europe include Birds Eye, Aunt Bessie’s, Goodfella’s, Iglo, Findus and La Cocinera.
Noam Gottesman, Nomad Foods’ co-chairman and founder, commented: “We are pleased with our third quarter and first nine months performance. The team continues to execute well while navigating a dynamic macro landscape, and we expect to report another year of solid earnings and cash generation in 2019. With over €700 million of cash and leverage at 2.8x, our balance sheet has us well positioned to enhance long-term shareholder value through organic growth and accretive M&A. We have been evaluating a handful of acquisition opportunities in recent months and look forward to providing updates in due course.”
Sales in Q3 increased in most of the markets in Europe in which Nomad Foods is active grew during the quarter, including the United Kingdom, Italy, Germany and France.
“We delivered 110 basis points of adjusted gross margin expansion, due in large part to an improved pea harvest,” stated Descheemaeker. “Pricing and promotional efficiencies and mix more than offset the cost of goods inflation. Overall, we are pleased with our performance and remain on pace to achieve our plans for the year.”
Adjusted gross profit in the third quarter increased 6% to €159 million, while adjusted operating expenses rose 1% to €80 million, reflecting advertising and promotion expense growth of 3% to €27 million and unchanged indirect expense at €53 million.
Over the first nine months of 2019 revenue increased 8.9% to €1,696 million. Organic revenue growth of 2.2% was comprised of 4.0% growth in price and a 1.8% decline in volume/mix. Revenue growth benefited 7.0% from acquisitions.
Adjusted gross profit over the first three quarters increased 7% to €510 million. Adjusted gross margin declined 40 basis points to 30.1%, as pricing and promotional efficiencies were more than offset by cost of goods inflation and acquisition mix.
Adjusted operating expenses increased 5% to €244 million primarily due to inclusion of acquisitions. Advertising and promotion expense increased 3% to €86 million while indirect expense increased 5% to €159 million.
Adjusted EBITDA rose 15% to €316 million, which included a benefit of €13.2 million related to IFRS 16. Adjusted Profit after tax increased 10% to €172 million, reflecting Adjusted EBITDA growth, higher finance costs and a lower effective tax rate. The impact of IFRS 16 reduced Adjusted Profit after tax by €2.0 million.
