May 14, 2018 / 9:54 AM / in 3 months

HelloFresh pulls further ahead in U.S. pre-packaged meals market

(Reuters) - German meal-kit company HelloFresh (HFGG.DE) raised its full-year revenue guidance on strong growth in the United States, its biggest market, sending its shares up 9 percent on Monday.

The company competes with Blue Apron (APRN.N) in the United States, delivering pre-packaged meal ingredients aimed at making home cooking more accessible.

HelloFresh’s first-quarter revenue jumped 44 percent, or 66 percent excluding currency effects, prompting it to increase its 2018 growth outlook to 30-35 percent on a constant-currency basis, up from 25-30 percent.

That contrasts with Blue Apron, which this month reported a 20 percent slump in first-quarter revenue.

HelloFresh has yet to make a profit but confirmed its goal to reach break-even on an adjusted EBITDA level in the fourth quarter of 2018.

Its shares rose 9 percent to 12.42 euros and are now up 17 percent since the company’s IPO in November.

HelloFresh overtook Blue Apron as the market leader in the meal-kit delivery in the United States late last year, based on customer numbers, and announced in March that it was buying U.S. rival Green Chef Corporation in a move that will boost revenue but will delay efforts to rein in losses.

Its customer base in the United States jumped 36 percent in the first quarter, while Blue Apron’s increased 5 percent, compared to the previous quarter.

HelloFresh has opened new distribution centers and continued to grow strongly, highlighting that it has far superior execution to Blue Apron, Berenberg analyst Robert Berg said.

The German company’s new annual revenue forecast does not include the positive impact from the acquisition of Green Chef, which is expected to contribute about $15 million per quarter from the second quarter.

HelloFresh’s margin on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved by 7.1 percentage points in the first quarter to minus 7.3 percent.

Reporting by Sylwia Lasek, additional reporting by Thyagaraju Adinarayan in Gdynia; Editing by Maria Sheahan and Susan Fenton

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