German meal-kit delivery firm HelloFresh has said that it no longer expects to break even in the fourth quarter of this year as it plans to invest margin profits to support growth.
HelloFresh added it now planned to achieve such break-even on adjusted earnings before interest, taxes, depreciation and amortisation (AEBITDA) basis during the course of 2019.
It follows other companies across the online takeaway and meal-kits sector such as Delivery Hero, who decided to shelve profitability targets this year and spend heavily in order to gain greater market share.
Price Reductions
HelloFresh, which competes with struggling U.S. rival Blue Apron, said investments would include such measures as price reductions, increase in meal selections in the U.S. market and scaling up of a new value brand.
The margin on AEBITDA improved by 6.1 percentage points to negative 1.2% in the second quarter, the company said.
Excluding the impact from Green Chef, acquired in March, HelloFresh already achieved break-even at the AEBITDA margin on a group level.
At the same time, the company raised its target for 2018 constant-currency revenue growth, excluding Green Chef, to 32 to 37%, from previously 30 to 35%.
Revenues at constant currencies grew 48% in the second quarter to €339.9 million euros, with 43% growth in the United States and 55% in the international segment.
"The strong first half of this year has proven that we can exceed our own expectations," commented Dominik Richter, CEO and co-founder of HelloFresh.
"Our strong margins provide the necessary tailwind for systematically capitalizing on additional opportunities in the market. In view of the growing demand in the meal kit market and beyond, we want to establish ourselves as the best provider across all customer and price segments."
Blue Apron said on Aug. 2 its second-quarter revenue fell 25%, missing analysts' estimates, as fewer customers signed up for its service.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
