Nomad Foods Q2 2025 Prepared Remarks Earnings Report

Nomad Foods EPS Results

• Actual EPS: $0.45
• Consensus EPS: $0.44
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.44

Nomad Foods Revenue Results

• Actual Revenue: $879.27 million
• Expected Revenue: $762.81 million
• Beat/Miss: Beat by +$116.47 million
• YoY Revenue Growth: -0.80%

Nomad Foods Announcement Details

• Quarter: Q2 2025 Prepared Remarks
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 6:45AM ET

Nomad Foods (NYSE:NOMD), together with its subsidiaries, manufactures, markets, and distributes a range of frozen food products in the United Kingdom and internationally. The company offers frozen fish products, including fish fingers, coated fish, and natural fish; ready-to-cook vegetable products, such as peas and spinach; and frozen poultry and meat products comprising nuggets, grills, and burgers. It also provides meal products that include ready-to-cook noodles, pasta, lasagna, pancakes, and other ready-made meals; ice creams, such as in-home and out-of-home ice creams; and other products consisting of soups, pizzas, bakery goods, and meat substitutes. The company sells its products to supermarkets and food retail chains primarily under the Birds Eye, Green Cuisine, iglo, Findus, Aunt Bessie's, Goodfella's, Frikom, Ledo, La Cocinera, and Belviva brand names. Nomad Foods Limited was founded in 2014 and is headquartered in Feltham, the United Kingdom.

Nomad Foods Q2 2025 Prepared Remarks Earnings Call Transcript

Key Takeaways

• Negative Sentiment: The company reported a 1.1% decline in second-quarter organic sales and has lowered its full-year guidance to flat to –2% growth.
• Negative Sentiment: Unusually warm weather across Western Europe drove an estimated –2% to –3% volume headwind for frozen foods, dampening consumer demand in key markets.
• Negative Sentiment: Higher cost inflation and price-cost lag compressed gross margins by 310 basis points, contributing to a 7% decline in adjusted EBITDA and a 9% drop in EPS.
• Positive Sentiment: Despite headwinds, Nomad stabilized and improved its market share, achieving nearly 1% retail sales growth through targeted advertising, merchandising, and innovation.
• Positive Sentiment: Free cash flow conversion rose to 43% year-to-date, enabling €100 million of share buybacks and a 132% increase in cash returned to shareholders.

Presentation

[Jason English, Head - IR at Nomad Foods]

Hello, and welcome to the prerecorded discussion of Nomad Foods' Second Quarter twenty twenty five Earnings Results. We have posted the accompanying press release and investor presentation on Nomad Foods' website at nomadfoods.com. I am Jason English, Head of Investor Relations, and I'm joined by Stephane Deschmeker, our CEO and Ruben Beldieu, our CFO. In addition to these remarks, we'll host an analyst Q and A session today at 08:30AM Eastern. A replay of this webcast and our subsequent Q and A session will be available on the Investor Relations section of our website.

[Jason English, Head - IR at Nomad Foods]

These prepared remarks will include forward looking statements that are based on our view of the company's prospects, expectations and intentions at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC and our Investor Relations presentation, which includes cautionary language. We'll also discuss non IFRS financial measures during the call today. These non IFRS financial measures should not be considered replacement for and should be read together with IFRS results. Users can find the IFRS to non IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website.

[Jason English, Head - IR at Nomad Foods]

Please note that certain financial information in this presentation represents adjusted figures for the first half and 2024 and 02/2025. All adjusted figures have been adjusted primarily for, when applicable, share based, payment expenses and related employer payroll taxes, exceptional items, and foreign currency translation charges or gains. Unless otherwise noted, comments from here will refer to those adjusted numbers. With that, I'll hand it over to Stefan.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Thank you, Jason. After nine years of uninterrupted growth, 2025 is proving to be a more challenging year. During the first half of the year, the successes we achieved, including the stabilization of our market share, were more than offset by several external headwinds affecting our industry and causing us to fall short of our expectations. In the second quarter, our organic sales declined 1%. This was weaker than we expected, and I will elaborate on the drivers in a moment.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

This top line shortfall was compounded by the pricecost lag that we discussed last quarter and caused our profit margin to compress and OIBDA and EPS to decline. Assuming normalization of weather, we expect to return to organic sales growth in the second half of the fiscal year, but we do not expect this improvement to offset the top and bottom line shortfall experienced in the first half. As Ruben will discuss in more detail later in the call, we've lowered our full year revenue and earnings expectations. This is something that I'm certainly not pleased with. As you can see on Slide four, value growth for category has remained relatively healthy at plus 1%.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Volume, however, weakened from roughly plus 1% in the first quarter to minus 1% in the second quarter. This is based on retail sales data through mid June. While we do not have more recent data for all of our markets, in our key Western European markets, we have seen a sharper decline through the June and into mid July. Weaker consumer demand in The UK due to cycling elevated frozen food promotions is one contributor to this, but we discussed this with you last quarter and have not been surprised by it. What we've been surprised by, however, is the unusually long duration of exceptionally warm weather across Western Europe.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Spring came early in Western many Western European markets, and it has temporarily changed consumer behavior. Chicana reported that there was 73% more sunshine and 58% less rainfall than last year, this spring in The UK, and that the average temperature was 18% warmer than the long the long term average spring temperature. In France, Chicana estimated that weather had a negative impact of 1% on frozen food sales year to date through May due to the early onset of spring. So we saw weather related headwinds building in the quarter and then June came, which ended up being the hottest month on record in Western Europe from Spain, France, Italy, and up to through The UK. This unusually warm weather continued across Western Europe into July.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

As a result, it has been a good time for selling beverages, frozen desserts, or barbecue foods in Europe, but a difficult time to be selling savory frozen foods. For example, in the four week period ending mid June, we saw ice cream volume growth accelerate to plus 8% year on year in our top four markets, while salad dressing volume also raised 8% and frozen food volume growth accelerated plus 817%. And that was before the most recent heat wave. While these categories have benefited, our analysis in our top five markets where we have where we have linear regressions models for weather indicates that the headwind to our categories volume growth was negative 2% for the twelve weeks period through mid June. And the analysis indicates that the impact was closer to negative 3% for our business, given that we over indexed to food that is typically baked at home such as coated fish and frozen vegetables.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

We saw larger negative impacts from weather. This is why organic net sales fell short of our forecast in quarter two, declining by 1.1% despite our retail sales growing by 1.1% in the quarter through mid June. But while it is unfortunate, we must also recognize that it is unusual. We cannot lose sight of our long longer term goals and the reality that we compete in an advantage category with long term growth opportunities. The frozen category has outgrown the overall food industry by nearly one percentage point over the past decade.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

And in our top four markets where we can access total industry data, not just frozen food data, we saw the frozen category outpaced overall food volume sales by last quarter by 60 basis points despite the unfavorable weather. The category continues to benefit from the secular trends of convenience, sustainability, value, and great listing foods. We remain excited about the long term growth of protein TNO category, and we continue to maintain the leading brands in this category. As a reminder, two thirds of our revenue is generated from lean proteins and vegetables, and over 90% of our UK and Western European revenue is generated from products deemed healthy meal choice by the UK government. We believe we are well positioned to meet consumers' evolving nutritional needs.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

That said, we recognize that category growth can be choppy as we are currently seeing, and our focus must remain on what we can control. Year to date, we have continued to invest in our business with strong advertising, impactful merchandising, and an accelerating pace of innovation and renovation. As a result, we've been able to grow retail sales by nearly one percentage point year to date. And as you can see on slide five, this investment has helped us to improve our market share. And we achieved this improvement despite facing a greater weather impact than of overall category given of strong position in frozen vegetables.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

In fact, analysis from our insights team indicates that we faced a 30 basis point volume per share headwind related to weather in our top five markets last quarter. I'm pleased with our team's ability to stabilize our market share despite these headwinds. Innovations such as our expansion into the snacking occasion with our fish bar brand in Italy is paying off, and our investment in our growth platforms is generating strong results. Our growth platforms grew net sales by 47% in quarter two and forty three percent across the first half of the fiscal year. For example, our expansion due to the prepared foods category in Italy has been very successful.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Our chicken portfolio retail sales grew 52% in market last quarter, and our market share has now reached 18%, five percentage point higher than last year's second quarter as we continue in year two of our expansion. And in Germany, where chicken is also a growth platform, our retail sales in the quarter more than doubled versus the prior year and our share, while twice what it was this for this time last year is still only 2.5%. This illustrates both the substantial size of the market and our long run rate for growth. Potatoes has been another important lift and launch growth platform that we've been highlighting. I'm happy to share that our success has continued.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

In The UK, our frozen potato retail sales rose 21% year over year as we gained 180 basis points of market share. And in France, our year to date retail sales are up double digits, and our share is up 113 basis points despite lapping big gains in the prior year. Our investment is paying off, and we have more to come. Last quarter, we shared some of our key initiatives supporting our fish portfolio beginning in q two and continuing through the remaining of this year, such as our new Captain Discovery Fish lines, which gained strong distribution at retail last quarter. On Slide six, you can see some of our second half initiatives supporting our Pizza and Meals portfolio.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

We're excited to launch our new GetReal protein bowls in the third quarter. These bowls bring a unique approach to ingredient selection and recipe construction to maximize the protein content while having a much cleaner ingredient label versus competition. We're targeting younger, health conscious consumers, which we expect to be highly incremental to our portfolio. In The UK, where our presence in Meals is small, this will be a new growth platform for us. And in markets such as Belgium and Netherlands, we support our messaging partners in Meals, where we already have a substantial category presence in these markets.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

And on the right hand side of the slide, you see our new and improved Goodfella's pizza line. These will hit store sales beginning in September and will be supported with a number of in store initiatives to drive trial. I can say from firsthand experience that these new products are much better than what we had before, and the research tells us that consumers feel the same way. These are great examples of how we're balancing the prioritization of taste and nutrition across our portfolio as we lean into both innovation and renovation. These are just two of our many examples.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Last year, innovation and renovation initiatives accounted for approximately 10% of sales. This year, we're on track to reach 16% to 17% of our sales. And in addition, we will be launching our new master brand advertising campaign in The UK later this quarter, which will coincide with three sixty degree activation. These are the reasons that we are confident that we'll return to organic sales growth in the second half of the year, assuming the unusual weather does not persist. While driving profitable sales growth is critical to our long term success, it is not the only area where we have undertaken self help actions to better control our own destiny.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Our supply chain team is working diligently to drive cost savings this year, while building a robust pipeline of initiatives to deliver savings in the years to come. And as you can see in the SG and A line of our P and L, we already have taken steps to reduce our costs across the organization this year to shrink or overrate expenses. And let's not lose sight of our ultimate goal. Our pursuit of profitable sales growth and relentless focus on productivity is aimed at maximizing of cash flow so that we can pursue strategic opportunities or return cash to shareholders. We remain on track to achieve our free cash flow conversion targets and are happy to report that we have returned substantial cash to shareholders year to date.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Through the first six months of this year, we have repurchased EUR 100,000,000 of shares and paid out more than EUR 48,000,000 of dividends. This collective return of cash to shareholders through the first six months of this year marks a 132% increase versus the first half of last year. Our priorities are aligned to enhance long term shareholder value. And while we have faced numerous external headwinds, we continue to have an advantage portfolio in an advanced category. Furthermore, we have robust plans to drive improved performance in the 2025 and beyond.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

On the top line, we successfully stabilized our market share in the first half of the year and achieved nearly 1% retail sales growth. We have even more robust innovation plans for the back half of the year. Barring more extreme weather, we expect our organic sales to return to growth beginning in the third quarter. And going forward, we're taking steps to ensure that we can take advantage of unusually warm conditions if they occur again. We can change our merchandising and consumer communication to emphasize different parts of our portfolio, like natural or recipe fish, as well as potatoes which perform better in warm weather.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

We can also provide recipe inspirations with barbecue solutions for our products, and we believe we can introduce more senior relevant innovation. So we're learning from this and getting stronger as a result. These initiatives will support near term and long term sales growth. On the bottom line, our price cost spread should begin to narrow as we execute select pricing actions in the second half of this year. And then we expect to more maturely close the gap beginning 2026 when our broader pricing actions take effect.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

And we're taking several self help actions to enhance our profitability. We've been aggressively analyzing our cost base. And while we have already taken some action this year, we believe we can do more. We're not in a position to go into details today, but Ruben and I are eager to share more with you later this year. So while I'm not pleased with our first half performance, I'm excited about what lies ahead.

[Stéfan Descheemaeker, CEO & Director at Nomad Foods]

Prior to this year, we have overcome numerous headwinds and successfully delivered nine consecutive years of uninterrupted growth. We suffered a setback early this year, but we have detailed and compelling plans to deliver more robust results beginning in Q3 and continuing beyond this year. With that, let me turn it to Ruben to take you through our results and mid term outlook in more detail. Ruben?

[Ruben Baldew, CFO at Nomad Foods]

Thank you, Stephane, and good morning, everyone. Let me get right into the results. As you can see on slide seven and eight, for the second quarter, reported net revenues decreased by 0.8% to €747,000,000 Organic sales declined 1.1% with volume declining 1% with price mix slightly negative. As Stefan mentioned, volume in the category was minus one in the quarter through mid June and softened further since then. In the most recent four week period through mid July, we've seen our category post high single digit volume declines in UK, France, Belgium and others.

[Ruben Baldew, CFO at Nomad Foods]

This was driven by the unusually warm weather and the transitory impact that has had on consumer behavior and retail and merchandising that Stefan discussed. It has remained a headwind early in our third quarter, especially in UK, and is reflected in our revised outlook where we are now assuming an approximately 1.5% negative impact from the weather on our full year outlook. While this is unfortunate, we expect it to be temporary. And as Stefan mentioned, we are happy to have successfully stabilized value share and gained volume share in the quarter while achieving year to date retail sales growth of nearly 1%. Turning to gross margin.

[Ruben Baldew, CFO at Nomad Foods]

The weaker top line equated to gross greater adjusted gross margin pressure than we expected, given lower fixed cost utilization in our plants. This compounded the price cost lag that we spoke about last quarter and caused our adjusted gross margin to contract by 310 basis points year on year. The largest driver of this decrease was higher cost inflation that more than offset our productivity gains and RGM benefits. As a reminder, we've seen a number of input costs move higher year to date with poultry prices amongst the most notable increases. We will take selected pricing actions in the second half to help offset this impact, but most of the offsetting price increases are not expected to come until next year.

[Ruben Baldew, CFO at Nomad Foods]

While the headwinds are having an impact on our 2025 results, we do not believe they are material enough to push through an overall off cycle increase in markets where we historically revisit prices annually. We will pursue these price increases in early twenty twenty six and are confident that we will ultimately recover the cost increases as we've done in the past. Moving down to P and L. Adjusted operated expenses declined by 11% year on year in the second quarter. A and P expenses were down low single digits in the quarter and rose mid single digits through the first half of the year.

[Ruben Baldew, CFO at Nomad Foods]

Overhead expansion shrank by 50% year on year in the quarter as productivity offset underlying inflation, and we reduced our bonus accrual given first half results. But despite the lower SG and A, our adjusted EBITDA decreased by 7% year on year to €129,000,000 while adjusted EPS fell 9% to €0.40 Turning to cash flow on Slide nine. Despite a lower profit, our year to date free cash flow has grown 70% year on year with our conversion ratio at 43% through the first six months of this year versus 32% in the same period as last year. The improvement was driven by lower working capital versus last year. As a reminder, it's common to see our mid year cash delivery in the 30% to 50% range.

[Ruben Baldew, CFO at Nomad Foods]

This is due to seasonal factors, namely the start of harvest related inventory build for our vegetables and higher revenue contribution from our Southeastern European business, which typically has lower collection terms versus the rest of our business. Turning to the use of cash. As Stefan mentioned, we continue to return cash to shareholders. Through the first six months of this year, we have repurchased €100,000,000 of shares and paid out more than €48,000,000 of dividends. This collective return of cash to shareholders through the first six months of this year is 132% increase compared to the first half of last year.

[Ruben Baldew, CFO at Nomad Foods]

And last week, we declared a quarterly dividend of $0.17 which is 13% higher than the same dividend last year. Turning to our guidance for '25 on Slide 10. As Stefan previously mentioned, assuming normal weather, we expect organic sales to return to growth in the second half, but we do not expect to recover the top and bottom line shortfall we experienced in the first half of the year. Our focus now is on delivering on our commitments for the second half of the year and laying the foundation for 2026. Weather disrupted growth for us in our category in the second quarter and the headwind has continued in July.

[Ruben Baldew, CFO at Nomad Foods]

As a result, we now expect full year organic sales to be flat to minus 2% our prior expectation of flat to plus 2%. The associated sales deleverage will pressure our bottom line, and we're also seeing slightly higher cost pressure related to the weather. Agricultural crops have been negatively impacted by the hot dry weather in Western Europe, and we expect this to result in higher than previously expected cost of goods sold inflation. We plan to recover this with price increases, but do not expect most of the increase to take effect until 2026, following annual price negotiation cycles with many of our retailers. We've also chosen to protect key A and P initiatives behind our brands to set the foundation for 2026.

[Ruben Baldew, CFO at Nomad Foods]

As a result, we now expect our adjusted EBITDA to decline by 3% to 7% year on year versus our previous expectation of flat to plus 2%. The higher end of the range assumes that the negative weather impact does not persist and that we face no other external or executional headwinds. The low end of the range is intended to create some buffer and enable us to avoid another negative guidance revision even if we face incremental headwinds. The impact of the lower adjusted EBITDA outlook is partially offset at the EPS line by share repurchases. As a result, we now expect adjusted EPS in the range of €1.64 to 1.76 compared to our prior outlook of €1.82 to €1.89 At recent exchange rates, our revised adjusted EPS guidance for the full year translate into approximately €1.89 to 2.02 Turning to free cash flow, we continue to expect a conversion ratio of 90% or greater.

[Ruben Baldew, CFO at Nomad Foods]

All in, while we face some incremental headwinds that we had not expected at the start of the year, we continue to feel good about the underlying health of our business. Our market share has improved and our category is healthy absent the transitory weather disruption. We are focused on controlling what we can control and have a number of initiatives underway to drive profitable sales growth, increase productivity, and improve free cash flow conversion. I look forward to sharing more detail behind these initiatives as we get closer to '26. Thank you for your time and interest in Nomad Food.

Participants

Executives

• Jason English, Head - IR
• Stéfan Descheemaeker, CEO & Director
• Ruben Baldew, CFO