Nomad Foods, a prominent player in the food and beverage industry, has revised its full-year 2024 projections downward due to complications arising from its Enterprise Resource Planning (ERP) system implementation. The UK’s leading frozen foods company now anticipates organic revenue growth to fall within a range of 1% to 2%, a decline from the earlier estimate of 3% to 4%. This adjustment was disclosed as Nomad Foods released its third-quarter results on November 14.
Earlier in May, Nomad Foods reaffirmed its guidance, expressing confidence that sales volumes would rebound positively in the latter half of the year. This optimism came despite experiencing three consecutive quarters of volume declines.
Nomad Foods, known for its popular brands such as Findus, Iglo, Ledo, and Frikom, has also adjusted its adjusted EBITDA growth expectations to a range between 3% and 5%, reduced from a previous forecast of 4% to 6%. Additionally, the adjusted earnings per share (EPS) is now expected to be between €1.72 and €1.77, indicating a growth of 7% to 10% compared to the previous year, slightly below the earlier forecast of €1.75 to €1.80.
Despite these changes, Nomad Foods remains committed to its cash flow conversion outlook, maintaining an expectation of 90% to 95% for the full year.
During the third quarter of 2024, Nomad Foods reported revenue growth of 0.8%, amounting to €770 million ($811.8 million). Specifically, organic revenue growth was recorded at 0.3%, with volume increasing by 0.7%. However, the company experienced a 2.5% “temporary” headwind related to ERP disruptions, which adversely affected operational efficiency and supply chain management during the quarter.
Gross profit surged by 14.5% to €248 million, with an improvement in gross margin by 390 basis points to 32.3%. This significant growth was attributed to enhancements in supply chain productivity, a positive product mix resulting from strategic investments in core brands, and lower-than-expected promotional expenditures.
In addition, adjusted EBITDA for the quarter rose by 19% to €166 million, while adjusted EPS increased by 28%, reaching €0.55. Nomad Foods CEO Stéfan Descheemaeker commented, “The results this quarter are impressive given greater-than-anticipated headwinds related to ERP implementation that we have faced. Our service levels were negatively impacted during the transition but are returning to near normal levels.”
He further stated, “We have also modestly lowered our full-year adjusted EBITDA growth and adjusted EPS guidance given the lower sales outlook, alongside our choice to continue to invest in the business. Our volume growth and market share recovery are accelerating in the fourth quarter, and we have chosen to prioritize fueling the momentum.”
In conclusion, while Nomad Foods navigates challenges within the food and drink business, it shows resilience and adaptability. The company’s ability to adjust its strategies in response to evolving consumer trends positions it well for future growth.
