Nomad Foods has reiterated its guidance that sales volumes will become positive in the latter half of this year despite three consecutive quarters of drops.

Europe’s largest frozen foods manufacturer, with brands such as Findus and Aunt Bessie’s, reported quarterly volume drops of 2.2% in the opening three months of 2024, after a 13% dip in the third quarter last year and 8% in the final three months.

Chief executive Stefan Descheemaeker told analysts during a results call yesterday (9 May) “the trajectory of volume is interesting in itself”.

He said: “Quarterly volume declines moderated significantly from last quarter, accompanied with strong products and customer mix as we begin to deploy our revenue growth management toolkit across key markets and categories.

“A key driver for anticipated volume recovery is our increasing focus on our best and biggest opportunities. The top 25 of these must-win-battles accounted for nearly two-thirds of our sales and an even greater share of our gross profits in the quarter.”

The group increased advertising and promotional spending by “more than 20%” in the opening quarter as part of its plan to resurrect volume growth. CFO Samy Zekhout said he continues “to expect our A&P spending to remain elevated in 2024, particularly in the first half”.

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Descheemaeker added that Nomad Foods’ frozen food brand Findus helped return “a strong rebound in our fish finger business in Italy”.

He told analysts: “After a difficult 2023, we deployed all elements of our growth flywheel to regain volume growth and drive greater penetration. The initial results from this initiative have been outstanding. Findus, our frozen fish brand in Italy delivered a strong turnaround in all key performance metrics including a material improvement in our value and volume growth trends.”

Nomad Foods reiterated its annual target for revenue growth of 3-4% and EBITDA growth of 4-6%.

Nevertheless, the company posted a 16.4% drop in adjusted first-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) to €122m ($131m).

Commenting on the net sales guidance, CFO Samy Zekhout said: “Our 3% to 4% net sales growth in 2024 is expected to be relatively balanced between price mix and volume, with positive volume growth for the full-year.

“We expect continued sequential improvements in the second quarter and consolidated volumes to turn positive by the second half as our renewed growth flywheel begins to turn faster in response to our investments.”

Nomad Foods reported revenue growth of 1.1% to €784m in the opening quarter, mainly driven by a price/mix of 2.5%. Gross profit fell 5.9% to €211m.

Adjusted profit for the period decreased 25% to €61m, and as a result, adjusted earnings per share decreased by €0.09 to €0.37.

John Baumgartner, an analyst at Mizuho Securities, said: “We believe consensus is very achievable this year, as, one, new synchronisation of revenue growth management techniques, advertising, and in-store promotion is a material driver of strong market share improvement since 3Q23, and, two, portfolio cross-selling into new countries contributes volume incremental to the core.”