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HelloFresh creates room for growth with U.S. investments

BERLIN (Reuters) - German meal-kit delivery firm HelloFresh HFGG.DE will expand its capacity to supply U.S. diners by 50% by mid-2021 as it eyes further growth even as the coronavirus-driven surge in home dining ebbs, CEO Dominik Richter said on Wednesday.

Berlin-based HelloFresh has been on a growth tear this year, with revenue rising 120% in the third quarter and its shares ahead by 138% in the year to date.

HelloFresh, the biggest meal-kit delivery firm with 5 million customers in the 14 countries where it operates, hit capacity constraints in many of its markets when governments locked down their economies in the spring, depriving diners at a stroke of the opportunity to eat out.

Richter told the Morgan Stanley European TMT Conference that fulfilment centres under construction in Georgia and Texas would ease supply bottlenecks. Overall, HelloFresh aims to run its facilities at 60%-70% of capacity.

HelloFresh plans to expand into one to two new European markets next year, and it will also roll out its tiered range of premium, mid-priced and budget meal kits already on offer in the United States in one or two new markets.

“For the foreseeable future we are going to be focused more on expanding in Europe,” Richter said, adding that HelloFresh would look on a three- to five-year horizon at expanding into Asia if there is a good cultural fit.

Investors should expect EBITDA profit margins to remain in a range of 10%-12% as HelloFresh invests in further growth, Richter said.

And, although HelloFresh has yet to issue revenue guidance for next year, Richter was very comfortable with suggestions the top line would grow in the mid-teens.

Reporting by Douglas Busvine; Editing by Kirsten Donovan

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