(Reuters) -German food delivery company HelloFresh said on Thursday its first-quarter core profits plunged as customers ordered fewer meal kits and the company ramped up spending on its fledging ready-meal business, but beat expectations.
Quarterly adjusted core profit (AEBITDA) came in at 16.8 million euros ($17.99 million), down sharply from 66.1 million in the same period last year. That was above analysts' average estimate of 3.6 million euros.
Revenue at constant currency rose 3.8% to 2.09 billion euros, slightly higher than analysts' average estimate of 2.02 billion euros.
But revenue at a constant currency from its core meal-kit business fell 6.9% to 1.57 billion euros, while its smaller ready-to-eat operations generated 502.6 million in revenue, up 56%.
The Berlin-based company boomed during the pandemic, while homebound customers were buying its pre-portioned ingredients boxes to cook during lockdowns. Now its meal-kit business is struggling as people tighten their belts because of inflation.
While costs rose due to the expansion of the ready-meal operations, the better-than-expected profits coupled with the company confirming its outlook may help soothe some investors' concerns about the company's strategy.
The Berlin-based company has issued two profit warnings since November flagging lower-than-expected sales growth, higher marketing expenses and the costs of ramping up its ready-to-eat business. The shares have lost about 80% of their value since mid-September.
Shares were up almost 6% in pre-market trade at 0600 GMT.
($1 = 0.9340 euros)
(Reporting by Paolo Laudani and Isabel Demetz;Editing by Josephine Mason)