On Friday, Citi reaffirmed its Buy rating and EUR31.00 price target for HelloFresh SE (HFG:GR) (OTC: OTC:HLFFF). The company's fourth-quarter earnings before interest, taxes, depreciation, and amortization (AEBITDA) were reported at €114 million, falling short of the consensus estimate of €121 million. HelloFresh's AEBITDA margin came in at 6.1%, which is a year-over-year decrease of 245 basis points.
The number of customers and orders declined by 6.6% and 2.8% respectively, contributing to a more cautious forecast for the fiscal year 2024. The gross margin percentage also weakened to 63.7%, a drop of 206 basis points from the previous year, despite heavier marketing expenses accounting for 19.1% of sales compared to the anticipated 18.0%. However, improved fulfillment costs at 37.2% of sales, versus the consensus of 40.0%, helped offset some of the marketing expense increases.
HelloFresh's guidance for fiscal year 2024 AEBITDA remains steady at €350-400 million, which is lower than the €448 million reported for fiscal year 2023. This anticipated decline is attributed to increased investment in the company's Ready-To-Eat/Factor offerings and reduced volumes and supply chain inefficiencies within its meal kit segment.
The company's currency-adjusted sales growth for fiscal year 2024 is projected to be between 2% and 8%, primarily driven by the expansion of its Ready-To-Eat/Factor products.
Additionally, HelloFresh has withdrawn its midterm fiscal year 2025 sales and AEBITDA targets of €10 billion and €1 billion, respectively. The lack of significant new information in the fourth-quarter report led Citi to consider the results as largely neutral for HelloFresh's stock.
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