HelloFresh ((DE:HFG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from HelloFresh painted a mixed picture, reflecting both substantial progress in efficiency and profitability metrics and challenges in revenue and the Ready-to-Eat (RTE) segment. While the company has made strides in its strategic path towards future growth with significant product upgrades, current operational setbacks pose notable challenges. Additionally, currency fluctuations have added complexity to the financial landscape.
Efficiency Program Success
HelloFresh has reported strong progress in its efficiency program, leading to a significant expansion of adjusted EBITDA and free cash flow. In Q2, the adjusted EBITDA reached EUR 158 million, with a 15.8% margin for meal kits, and EBIT grew by 20% year-over-year to over EUR 100 million. This improvement underscores the company’s focus on enhancing operational efficiencies.
Contribution Margin Improvement
The contribution margin saw a notable increase of 1.4 points, reaching a multiyear high of 27.3%. North America, in particular, experienced a 380 basis point improvement, highlighting the effectiveness of HelloFresh’s strategic initiatives in this region.
Share Buyback Program
Reflecting strong cash generation, HelloFresh has upsized its share buyback program from EUR 75 million to EUR 175 million. This move indicates the company’s confidence in its financial health and commitment to returning value to shareholders.
Free Cash Flow Growth
In the first half of 2025, free cash flow increased fourfold compared to the same period last year, with free cash flow per share rising from EUR 0.30 to EUR 1.24. This growth is a testament to the company’s improved cash management and operational efficiency.
Product Launch Initiatives
HelloFresh has launched major product upgrades for its U.S. operations and Factor US, aimed at enhancing customer experience and paving the way for future growth. These initiatives are part of the company’s broader strategy to reinvest in its product offerings and drive long-term success.
Operational Improvements
Direct labor productivity has improved significantly, with a 19% year-over-year improvement in RTE and a 5% improvement in meal kits. These operational enhancements are crucial for maintaining competitiveness and customer satisfaction.
Revenue Decline
Despite operational successes, HelloFresh faced a 9% year-over-year revenue decline to EUR 1.7 billion, with orders declining by 12% in Q2, including a 16% decline in North America. This decline highlights the challenges the company faces in maintaining its growth trajectory.
RTE Segment Challenges
The RTE segment experienced operational setbacks, leading to temporary disruptions in customer satisfaction and growth momentum. Addressing these challenges will be critical for HelloFresh to regain its footing in this segment.
Impact of Currency Fluctuations
Currency fluctuations, particularly the weakening of the U.S. dollar against the euro, negatively impacted HelloFresh’s financial performance, resulting in a EUR 38 million hit on EBITDA and EUR 28 million on adjusted EBIT.
Operational Complexity
Product upgrades have led to increased operational complexity, causing higher meal repetition and reduced menu novelty, which temporarily affected customer satisfaction. Managing this complexity will be essential for sustaining customer engagement.
Forward-Looking Guidance
Looking ahead, HelloFresh is embarking on a major product reinvestment strategy, dubbed The ReFresh, aiming to enhance customer experience and return to growth. Despite a 9% revenue decline, the company has narrowed its top-line guidance for 2025 to a decline of 6% to 8%, driven by temporary setbacks in its RTE business. Adjustments in the euro-denominated EBITDA guidance maintain the previously implied margins, showcasing the company’s resilience in the face of currency fluctuations.
In conclusion, HelloFresh’s earnings call revealed a company navigating a complex landscape of operational successes and challenges. While efficiency gains and strategic product upgrades position the company for future growth, revenue declines and RTE segment challenges underscore the hurdles ahead. The company’s forward-looking guidance reflects a cautious optimism, with a focus on reinvestment and customer experience enhancement as key drivers for future success.