May 5, 2020 / 5:11 AM / 20 days ago

HelloFresh raises 2020 outlook on lockdown hunger for meal-kits

(Reuters) - German meal-kit delivery firm HelloFresh (HFGG.DE) raised its 2020 guidance on Tuesday, saying it expected second-quarter core earnings to exceed first-quarter levels as coronavirus restrictions make people dine at home.

The news drove its share price 8.6% higher by 0824 GMT, adding to gains of roughly 70% this year as investors anticipate restrictions on movement to contain the novel coronavirus will continue to boost food delivery demand.

The Berlin-based company allows customers to choose from an online menu of recipes and have pre-portioned ingredients delivered to their doors.

It expects full-year revenue growth of between 40% and 55% on a constant currency basis, up from a previously announced range of 22% to 27%.

HelloFresh has outperformed struggling rival Blue Apron (APRN.N) in its core U.S. market. It is also active in countries including Britain, Australia, Canada and Germany, where it said increased brand recognition was helping to cut marketing costs.

“On top of our already very strong first two months of the year, our meals have attracted significant additional demand in the second half of March,” Chief Executive Officer Dominik Richter said in a statement.

Full-year adjusted earnings before interest, taxes, depreciation and amortisation (AEBITDA) should be between 6% to 10%, the company said.

Richter told Reuters in a call the company had had to “massively limit the amount of new customers” and focus on the existing ones because of the increasing number of facilities working at full capacity to cope with demand.

But he said the company planned to increase capacity and hire more people without giving numbers.

Data from SimilarWeb, which tracks downloads and the use of smartphone apps and websites, showed average daily traffic to the HelloFresh U.S. website for April 1 - 25 fell by 36.8% compared to March.

In its conference call last week, U.S.-based peer Blue Apron (APRN.N) said it had struggled to satisfy the sudden increase in demand, but it also expected a jump in orders in recent weeks to benefit the second quarter.

HelloFresh’s first-quarter results on Tuesday showed sales of 699.1 million euros ($762.58 million) and AEBITDA of 63.1 million euros, both in line with the company’s guided range of 685 to 710 million euros for sales and 55 to 75 million euros for AEBITDA.

Reporting by Linda Pasquini; additional reporting by Anna Rzhevkina; editing by Clarence Fernandez and Barbara Lewis

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