Q1 2023 Nomad Foods Limited Earnings Call
Good morning, and welcome to the Nomad Foods first quarter 2023 earnings conference call.
All participants will be in listen only mode.
You need assistance. Please signal conference missiles for Christmas Starkey, followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn conference over to Anthony.
Alan.
Investor Relations. Please go ahead.
Hello, and welcome to the Nomad Foods first quarter 2023 earnings call I'm, Anthony co head of Investor Relations and I'm joined on the call by Stefan to Shoemaker, our CEO and San music Who's our CFO .
Before we begin I would like to draw your attention to the disclaimer on slide two of our presentation.
This conference call May 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 this slide in our Investor presentation, which includes cautionary language. We will also discuss non <unk> financial measures during the call today. These non <unk> financial measures should not be considered a replacement for him.
It should be read together with.
Rs results.
You can find the I F. R. S. Two non I FRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website.
Please note that certain financial information within this presentation represents adjusted figures for 2021 and 'twenty two all adjusted figures have been adjusted for exceptional items acquisition related costs share based payments and related expenses as well as noncash FX gains or losses, unless otherwise noted comments from here.
On what part of those adjusted numbers with that I will hand, you over to Stefan Thank you Tony.
Thank you for joining us on the call today, Newmont and had a solid start to the year, although sales momentum from the second half of last year continued in the first quarter. Additionally, our teams either Nixon job executing the strategies, we know that God needs February .
I'm pleased with the performance of the great people across Nomad with delivered excellent results to start the year off right last year, we faced a difficult environment brought on by postcode and inflation in the old break up the Ukraine, who.
We adapted to confront these challenges last year and put new plans in place this year to make nomad, even more resilient and position for growth overall, we believe our Q1 results demonstrate that we own the right path to accomplish our goals.
In Q1, our revenues grew organically 8%.
The sequential quarter of improving sales trends.
It's about pricing strategy and disciplined supply chain management, where feasible and improving adjusted gross margin and EBITDA margin both of which grew 100 basis points year on year. We also delivered adjusted EPS of 46, your sense, which grew 7% in the quarter.
As we shared at Cagny in February you have three central proteins for this year or first priorities to strengthen our commercial approach with additional E&P investments for our brands, while adding affordability options both stress consumers.
This includes not just innovation, but innovation for many of our best selling products or.
Our second priority is to leverage the efficient savings from our world class supply chain to help fund growth.
The final protein is execution of our revenue growth management strategy.
Designed to recoup costs through pricing and maximize the value of our portfolio.
I'm happy to say, we are on course for all three.
The new E&P investment is reaching the market, knowing Q2, and we'd be fully deployed in the third and fourth quarter as well.
Supply chain is performing well.
Delivering excellent service and efficiently managing our procurement process.
Finally, our revenue growth management execution is helping drive price and mix.
Further narrowing or cost gaps.
Overall, nobody is in a much better position today than at this time last year.
We are highly encouraged by the resilience of our topline in the proven you know margins.
So it is we will have its challenges, but we all we though improving fundamentals and expected step up in cash flow and strengthening balance sheet. We are highly optimistic about this year and beyond we are on track to meet all guidance expectations with that I'd like to recap our first quarter key financial.
Metrics, beginning with revenues Q1 revenues grew five 8% with strong pricing more than offsetting volume declines organic sales grew 8% well wisdom, we experienced two two percentage points of negative Forex impact adjusted gross margins.
100 basis points to 28, 9% driven by our pricing initiatives and supply chain execution.
Adjusted EBITDA grew 11% to 146 million euro with margin improving 100 basis points and finally, adjusted EPS was 46 years since the share.
7% versus last year.
Current U S dollar spot rates or Q1, adjusted EPS was 51 cents.
Our revenue performance was strong in the first quarter as our pricing from the second half of 2022 rolled over into the start of the year. This was the fourth sequential quarter of improving organic sales trends.
James the challenging consumer environment, while meeting pricing more than offset a mid single digit volume decline, although volume win impacted by elasticity and price gaps with competitive competition. We have further narrowed the gap between our pricing and input cost this quarter with a positive margin expansion route.
Raw material prices are moderating.
However, we are not seeing meaningful deflation.
As our plan to recoup or input cost inflation from 'twenty to 'twenty two wins when the 23 by year end.
This will have no plans for stepped up investments in A&P and innovation.
Is crucial for the health of our business.
Our World Class supply chain continues to show positive results with delivery service to our customers at the multi year high with level above 97% up 100 basis points from last year.
Additionally, we remain disciplined on procurements, and we are covered for nearly 80% of materials for the year.
We're giving ourselves more flexibility on coverage than in previous years.
Becoming more analytical and strategic on the whole week why raw materials.
We lost about 1% Buddy who share this quarter.
This loss was the direct impact of both elasticity in the price gaps, which have not yet narrowed because he's a private label competition.
However, our new in being best movement is the market starting late in Q2 and will be rolling out across the balance of the year.
With greater brand support and innovation, we expect to reverse these losses as the year progresses.
Finally, with our strong EPS delivery. This quarter, we are raising the lower end up for 2023, adjusted EPS guidance to one euro 52 from one year old 50.
Our original range of one Euro 50 to one Euro 55, no stance at one Euro 52 to one euro 55.
This represents an adjusted EPS range of $1 67 to $1 71 at current U S dollar rates spot rates and excludes any impact of capital allocation.
This quarter, we benefited from the adjustments we made to our business model last year combined with the new plants, we have rolled out this year.
We plan to return to restrict margins over time, and we made progress during the quarter in Q1 margins benefited from a pricing from the second half of 'twenty to 'twenty two.
Additionally, we showed the benefits and the benefits of supply chain discipline and cost savings programs.
As a result, our gross margin expanded organically for the first time since the end of 2020.
With a continued focus on price realization and supply chain discipline. These goods early stops puts us on target to meet the old goal of flat adjusted gross margins.
For 'twenty to 'twenty three the consumer.
These are the center of everything we do when we kicked off well before the BT sweaty designed to attract and retain consumers. During this period of high inflation across Europe , we have adjusted many of our promotions on key items in selective markets to keep consumers in our portfolio.
Actually well expanded above and below the line communication strategies are carrying the message of frozen food intrinsic values.
Clothing, lower waist high nutrition product vicinity visit the D P and good value.
We are seeing strong initial evidence that our message is taking root.
Long term, we think the strategy gives us the opportunity to reconnect with consumers.
And strengthened loyalty to our brands.
Finally, we seen the full benefits of the farmed fish supply strategy, we'd center regions. After the old break of the Youku enrolled last year.
With a new source of fish.
We launched new innovative products across four of our markets, including the U K, Germany, the Netherlands and France.
We have a scheduled expansion into at least another three new markets. This year munis.
Initial results have been very encouraging and we are excited being innovation Aboding DS.
The new supply of high quality fish provides us.
With that I will now hand, the call over to Sami to review, our financial results and guidance in more detail.
<unk>.
Thank you Stephane and thank you for your participation on the call today.
Turning to slide six I will provide more detail on our key first quarter operating metrics beginning.
Meaning with reported revenues, which increased five 8% to 775 million Euro eight.
8% organically.
First quarter revenues when he gets to be impacted by two 2% of unfavorable effects.
We saw it at TCT topline performance as volumes came under pressure due to price increases and the persistent price gap with private label.
These volume declines were expected and are inline with expectation as we aim to recover cumulative cost increases from last year and this year.
These volume declines have impacted our market share, which was up about one point for the quarter.
As we communicated at Cagny, we expect market share trends to improve sequentially. This year driven by our innovation efforts on affordability as well as it did.
N P investment.
We didn't even know disturb mouthing performance this quarter, our adjusted gross margin was 28, 9% 100 basis points increase versus the prior year, reflecting the successful recovery of the hydro input costs through pricing.
We continue to navigate an inflationary environment in Q1, we saw a benefit in the cost of goods sold from the tail end of cover position from 2022.
Looking ahead, while we absorb cover now in place for the rest of 2023, the Pune effect of inflationary impact on Cogs will be realized as the year progresses.
As we look out to the rest of the year, we expect to deliver flat gross margins supported by price increases and cost discipline.
Moving now to the rest of the P&L.
Our adjusted gross profit grew 10% to 224 million for the first quarter.
Adjusted Cogs increased to 551 million Euro an increase of four 3%.
23 million Euro was a soft year adjusted operating expense of 100 million Euro was up 6% year over year.
Adjusted EBITDA of 146 million Euro was up 11% of the sub tier.
Adjusted EBITDA margin Lindsay that 18 post 9% an increase of 100 basis points.
Finally, our adjusted EPS of <unk> 46 zero cent was up 7% in Q1.
This translates into 51 cents in the U S. So long term I suppose right.
Turning to cash flow on slide seven cash generation is crucial to the health of our business and remains a top priority as we consider our capital allocation for this year and beyond.
In Q1, we generated 25 million euros adjusted free cash flow for a conversion ratio of 32% to 62% in Q1 2022.
Q1 was adversely impacted by the phasing of inventory receivables and payable in certain markets during the quarter.
The adverse phasing of receivable and payable is temporary and should reverse in Q2.
We remain on target for 2020 free cash flow guidance and our options for our strategic capital allocation remain wide open.
So the 21 million Euro was flagged this sounds here with.
We continue to support strategic investments in the business.
Changes in cash tax increase 1 million euros to 10 million, while cash interest was down 2 million euro to 25 million Euro.
As part of our refinancing in November 2022, we'd be facing as higher cash interest payments on the person about that as a result, we saw a cash benefit in Q1 before realizing the full impact of the higher interest charges in Q2.
Last year, our cash generation was negatively impacted by a working capital build to mitigate the possibility of supply shortage in the middle of the year were also impacted by the implementation of unfair trade practices Directv U T. P D in the U.
Sure will.
Our inventory level, a new T. P. D debate, we stated cash flow conversion in line with our historical average.
With that let's turn to slide eight to review, our 2023 guidance, which we initiated in 2022 earnings report in February and now the team today.
This guidance is based on foreign exchange rates as of May three 2023.
We are also taking the original guidance, we delivered 2022 year end earnings report.
First we expect organic revenue growth to be in the mid single digit range for 2023.
We expect our pricing initiatives to more than offset volume declines.
We expect cash flow to be in line with our historical performance when their working capital and you typically in debates, we expect our cash conversion ratio in the range of 90% to 95% in line with historical averages.
We are raising the bottom end of our original two.
2023 guidance, we now expect adjusted EPS in a range of 152 to one year old 55 per share.
One there are 67 to $1 71, and currently you have disposed trades.
This replaces our original guidance of one year of 50 to 155 and excludes any impact of capital allocation.
I will now turn the session over to Q&A operator back to you.
We will now begin the question and answer session.
Good question, Michael Furthermore, your telephone keypad.
If you're using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question will come from Jason English.
With Goldman Sachs you May now.
Hey, good morning folks are perhaps it's good afternoon, where you are.
A couple of quick questions. You mentioned I think Stefan this is the in your comments you plan to recoup the inflation incurred in 2022 and 2023 collectively by year end.
My question is how are you expecting to have more of list price increases are our I believe you've you've tapered some trade on top of list price increases is the anticipation that you'll be able to pull back on some of that trade to get more effectively net price realization by you're at.
Well, it's a bit of a combination of everything to your point. The first the first be agenda and we are well you know we are women bag in terms of recovering of the price increase don't forget you know that it's something which is obviously started last year. So we have obviously the positive impact of a 2022, where would you already had some negotiation but positive negotiations.
Early this year. So what's left is much lower and don't forget at the same time.
The inflation input cost inflation that has somewhat decelerated in the meantime, which is probably a deceleration is probably higher or better than anticipated, which helps us as well. So that's the piece that the macro piece, where we stand. So yes, we're still left with with it.
<unk>.
Some negotiation, but it's it's nothing comparable to what we had.
Last year.
Our data with that obviously, you're going through to consumers consumers is the bulk of you Steve Provost and nobody thinks it. So it's much more about revenue growth management and its really it has really become you know a big.
It's becoming more and more big muscle for us.
Right now and also the.
For the for the coming months and years. So that's why we started that maybe I can I can't complete youll get compliments semi dependency.
You said you said most of it is the one thing Jason I Wouldnt system is actually the pressure for the coming quarter as each I pretty much lower than what we have done given the what has been executed so far and what we're seeing from an inflation trend.
If it was it would get to the point of let's say revenue growth management strategy, which we already know leveraging full speed across the market to really make sure that we execute some of the intervention jobs.
Let's say in the REIT market in either category.
Main competitive versus the rest of the market as well. So clearly we are on trend.
Hello, Matt.
Okay and you also commented in prepared remarks that private label gaps have not yet narrowed is that like they haven't yet narrowed all the way back are they narrowing but just are you seeing progress on that front I guess as I had said that the core of my question and with the cost pressure, perhaps moderating a bit dull.
Is that does that influence your expectations of how far you expect private label to to go at closing those gaps.
Well, it's a complicated question, Jason because obviously, it's not.
The other people. So we go up and those who can get what they are going to do.
The only thing we can say is we are all subject to the same let's say constraints the market. The market is the market you know the fisheries the fish.
The vegetables, and the basketball so or decision was.
And he still is by the way to make sure as Brian players at brand leader, we want to obviously maintain our gross margin so as to be able to reinvest at the various sensor a brand leader and Thats, what we got to do what other people might decide to do with their margin is something else.
We haven't seen in the overall, yet you know a very significant narrowing down of the difference. It may come may not come but probably you should ask them at some stage.
Indeed, if I, if I get a hold of my well. Thank you very much I'll pass it on.
Thank you.
Our next question will come from John Baumgartner with Mizuho Securities You May now go ahead.
Good morning, Thanks for the question.
Hi, John Hi, John .
Maybe first off I wanted to walk through the four inova assets as we're heading into the peak season, there and especially as you're lapping a tough comp on the revenue side are there any fundamental or structural improvements or enhancements you can highlight that you've implemented that are poised to benefit operations. This year on the revenue side.
Well to your point last year was a really great year and believe me we have all the intent to have another great year. This year.
Whether with all the weather I think the I think the other thing that we are very much in line with our business model by the way. We've improved. So first you know you have a huge let's say number.
Number of freezers in some way or data and as expected you know improving all of these freezers, but I think if memory is right you have around 120000 freezers across the border region, which is a great route to market as you can imagine and some you know how to be somewhere O data and as expected we change it.
Which is great and it's going to help us.
And with the retailers and with the consumers. That's the first piece. The second piece is we also improving let's say the quality of the factories that was also part of the plan.
And the third piece, which is something we have run since last year.
You probably need to you know to be ready on time already on time in terms of the inventory of finished goods.
Because it's another it's another game VW frozen food. So you have to make sure that you're going to be ready, let's say Q1, or even Q4 Q1 Q2 to deliver.
It's quite different from processed food he was just going to rely on.
Q2, and Q3 to deliver your ice cream last year, we had some out of stocks.
Because we haven't fully grasped that piece and obviously reloading and so that was actually the third piece.
Piece of improvement that we are we coming up with on top of that you know the team is well the team is great.
With the advantage they theyre doing a fantastic job they've come up with the new taste.
Those are among the best you ice cream in the world.
And.
It's it's you know it's got to come by the way we also have.
We opened a new Avenue in terms of exports, let's say to Austria, where you know you have a very sizable community of crush there, especially in general and as you know we have a very strong distribution in this country and so if you go to Indiana.
Right you do go to some of the stores there for Derma Spa, it's nothing surprising here.
Then you will see some of the later products.
And they were you know it's it's.
We are very confident that's going to do well. So yes, very pleased with what we have qualitatively and quantitatively.
Okay. Thanks for that Stefan and then just a follow up I wanted to ask about the A&P spending.
Your categories, you know I wouldn't say are our impulse oriented and I'm curious how long you think it might take to convert your investments into increased takeaway are there specific programs, you're targeting that you're more optimistic and deliver a reasonably fast payback, whether it's trade or messaging just any perspectives on programming would be helpful. Thank you.
Yes, I think and we have communicated John and our clear intent to step up our investment in A&P.
As you have seen over the past year that we had taken it down really by trying to optimize your portfolio, but it's about time that we reinvest behind the asset that we are in and I think that there is a number of things that we are really doing now which is refuelling effectively the level of spending behind our must win battles.
We do know that when we invest there the payback keeps quite fast and so because of the breadth of quatro, but nevertheless, given the fact that the trend has been a bit down over the balance isn't just going to take a bit more time than usual, but clearly that builds up to fuel sustainable growth as we move forward investing effectively around the equity I mean, it's very important the captains.
A perfect example of that where clearly refueling effects of our investments I mean, there and what pace back a bit faster sometime it's likely more innovation driven.
More effective targeted too early say coordination between in store and equity investment can we try to take a holistic NP intervention, there, where we see faster returns.
Usually within the 9% to 12 month ish, whereas each of the classic advertising as a typical on the longer payout there, but we're clearly trying to balance that.
Need for investing behind the must win battles that are absolutely critical to bring them back on par with what is making growth strong and profitable.
Top trying to leverage any commercial option related to market dynamics for instance, let's say clearly cost of living intervention or innovation intervention all done in a 20 year plus as an example, coming yet of course with advertisers and that has a clear return much faster than others and you will see stepped up investments.
Starting really at the end of Q2, and then really Q3 and Q4.
Thank you very much.
Thanks, Joe.
Our next question will come from Peter <unk> with <unk> you May now.
Great. Thanks for taking the question.
I just wanted to ask on the pricing plans I know you had a mid teens pricing.
First quarter here, how should we think about your pricing for the balance of the year do you anticipate at this point in time, taking any additional price given you haven't really seen any deflation maybe some just moderation commodities.
Commodities, just just trying to understand how youre thinking about the pricing lever for the balance of this year.
Yeah, as we said earlier.
Pricing if you want that is going to call me is actually much less than what we had originally planned for the reason that affected our first tranche that has happened in a GSM is going really well.
And that pass through and on top of that is what we see let's say a lower pressure on inflation that is putting if you want coming burden on the needed to recover inflation through pricing lower than planned. So clearly at these various stage is definitely within the range of pricing intervention that pretty much more moderate over the.
Quarters to come as we see forward, we will be very specific because it's inflation hits across different categories different market at a different level and we try to make sure that the factory. We'll go wherever it makes sense with the intent as well of taking advantage from an inflation standpoint on the fact that we are hedged at about 80% as we indicated and you have 20%.
Hedge alone. These unhedged part, we intend to clearly leverage any positive, particularly in the market in case, you have access to input cost at a lower price it should reduce the pressure for pricing in the next quarters. So clearly.
Please go ahead and at this stage much more manageable as we move forward.
Great. Thank you very much.
Our next question will come from Cody Ross with UBS you May now go ahead.
Good morning, This is Simon Megan filling in for Ross.
Hey, you haven't hi, Simon.
Hey, there you havent repurchased shares since the first quarter of last year as you focused on securing inventory when do you anticipate share repurchases being a bigger part of the capital allocation process again.
Well, we definitely have them consider share repurchase as part of our capital allocation strategy. As we have mentioned I mean, many times the focus over the first quarter was going to stabilize the business as we are clearly getting into let's say in.
Inventory and receivable and payroll at the time management at the time, we are executing pricing and securing the supply now we're getting out of this let's say care transition quarter now we call. It the next quarter to look at the production appearing to us whether this is affecting share repurchase or other capital allocation strategy, but share repurchase remains.
<unk> hired our agenda and we've been opportunistic on that and as market goes we will effectively execute our strategy as we move forward on that.
Okay.
Great. Thanks, so much.
Our next question will come from Steve powers with Deutsche Bank.
Go ahead.
Hey, good afternoon.
I wanted to ask about your manufacturing savings that you had you target to step up and manufacturing savings entering 'twenty three and I guess just wanted to get a status check on on progress there and how.
How much you've you've already started to receive and that we've seen in the first quarter results versus how much is because you got to build over the balance of the year.
Yes, definitely the programming in place we.
We have different tactics, if you woke up of development. There one was the pure manufacturing efficiency in the different sites that we had.
Kelly leveraging all the opportunities to implement our lean program activities.
Order to clearly reduce the conversion cost overall, taking into account the volume dynamic as much as effectively the utility and the efficiency that I need to productivity than any crude that we are in the program is well in place and delivering you showed good savings in line with our plan and it is a widespread plan over the quarters. So what you see in quarter, one you're going to spread the word.
Coming quarter there.
The lower the range of intervention that we had made that which was more geared on product formulation and if your ability to meet the market needs in a very effective way and within that plan. We have made some of the interventions that are gradually being implemented and you can understand that whenever we touch product reduction different parameters such as package.
Well go to market and pricing and others and those are being deployed as we go but very clearly the investment and the focus isn't there a great team there that is implementing that infill.
Inflation as we said I mean, clearly going on the right trend I mean, the decision we have taken the opportunity of the market opening to get to our existing took us at a lower price and so the selling price come in as planned and is reflected effectively on our overall performance as we move forward in line with our expectation.
Okay.
So as you know logistics, yes.
Where we're making a lot of progress savings and still a lot of opportunities ahead of us.
Okay. That's helpful. Maybe if I could the other you'd also communicated at Cagny, you know relatively sizeable step up in innovation spending and I guess similar question now how much of that have we already seen how much of that is yet to come just any any any early early feedback on <unk>.
Yes, the return expectations on that investment.
Well the first one as.
As you May know as David.
About buzzer or spend gas used in continental Europe . It came out of necessity.
Last year was obviously your break of the Ukraine wall with we've really moved from necessity to an opportunity for us.
So something like them.
End of Q3 last year, we really started to develop you know that that's part of the new business, which is farm fish, which is great by the way the product is great and no we have developed.
And the lowest buzzer in.
In four countries, Netherlands, UK, Germany and France.
And it's doing well were making a lot of progress we are planning to have another three countries by the end of the year and that's innovation because it's it doesn't replace.
Projects It doesn't replace you know.
Cause the Pollak, it's really something new.
And that's a big innovation.
Second piece is more about the affordability and we also have some very interesting let's.
Let's say new innovations, especially especially in fish. So these are the two was the first two pieces, where we have invested more to come but let's say in <unk>.
One thing interesting as well when you say, it's a duration of innovation with the pizza in France, we were not present in France.
We think we have the right reason to be present with either in France, we have the right distribution with good philosophy is a great product and let's face it.
For reasons you know that's all.
Linked to competition it wasn't big White space, there is a big white space available there and we've seen you know we had the conversations with the retailers and they're very open and then we have no. You can see you can see with fitness pizza with gasoline for example in France and in other with other retailers. So that that is also you know.
I Love this innovation, because they don't cost anything by the way because it's available.
Theyre just not present in that specific country, which is great.
Pieces, especially you know doing this cost inflation because it goes up leaving causes is renovation.
The big piece for us is to make sure our products are.
<unk> products are going to come up with.
Superiority in terms of packaging in terms of pace and all these things and that's you know short term and midterm that's absolutely critical for US. So these are the big pieces, we have invested more to come obviously with.
Let's say in the coming months for 'twenty 'twenty four and onwards, but these are the big themes that we think are very much adapted to the current situation.
Very helpful. Thank you very much.
Our next question will come from Rob Dickerson with Jefferies.
You May now go ahead.
Alright, great. Thanks, so much.
Got.
Already went through all that.
Hopped on late.
Just a kind of a question around you know trade spending.
Promo kind of vis vis the gross margin clearly in first quarter gross margin was great.
Originally carotid Concordia had said.
The sequential progression in gross margin.
But now a great partner so far it doesn't seem like there's probably sequential progression really still occurring because a lot of it was front end loaded.
Do you feel like you know kind of where you see the marketplace today.
What you had budgeted I guess a little tricky.
The study or do you think you might need a little extra room.
Get through the year.
You only need to make sure you're getting the velocity is it again, just asking kind of yeah as it pertains to that kind of a delta in the gross margin floor. That's it. Thanks so much.
Yes.
Yes.
And that's in line with what we were expecting I mean, the one thing, though that we have looked at more poorly in the context that we've been facing with a good quarter behind us is that the key whether looking at our revenue growth management.
Strategy, whether there could be some surgical intervention to be made on some key country category combination, where we clearly are running behind from the share momentum standpoint, and looking at opportunities to do so don't expect if you work moving forward.
Massive change there, but much more targeted intervention to really let's say maintain a price gap that is conducive to also grow <unk>.
Three opportunity to reignite growth in some of the category, where clearly we've taken pricing and marketing we may have to be more competitive promo was discontinued to remains a category that.
He is a heavy promotion driven.
Clearly you had a very strong promotional plan I mean across the rest of the in the vast majority of the market, but wherever we have opportunities more surgical to ignite a stronger growth and regain share momentum definitely we look at that but as I said, he's going to be more country by country category by category basis.
Okay, Great and maybe just a quick clarification or follow up when you talk about.
The strategic.
Pricing, you know kind of dependent on end market positioning.
Is that kind of away from pork pork, Nova that just think of it all kind of handheld ice cream.
At our eastern Europe at the beach like people aren't really vital chroma. So it's really you're kind of talking more about those core categories rally more frozen fish.
Frozen badge, maybe is that right.
Yeah, we will get us to the ability to catch up.
We have started the work as well to see.
<unk> is that more the growth side of profitable growth side than anything, but I would say the majority of the emphasis on the more core categories.
Then on ice cream category.
Alright, great. Thanks, Jeremy.
Okay.
Again, if you have a question. Please press Star then one.
Our next question will come from John Ken Wong Tang with CJ Securities.
I'll now go ahead.
Hi, Good morning, Thank you for taking my questions and congrats on the strong results.
Send me that I didn't know if you addressed this previously but did you mention.
How are you expecting gross margins to trend through the quarters.
Just on the cadence perspective is there anything different from.
Your normal seasonality or are there some puts and takes that we should be thinking about.
No we maintain the guidance, which is about flat margin for the year.
Bump we had in Q1 was expected and is going to then deliver a leader to deliver in line with expectations on that.
Okay, Great and can you give us an update by region, what youre seeing if theres been any surprises in any of your end markets I know there's been protests in France that have been fairly disruptive to other industries.
Just tell me if there's anything that's surprising you know good or bad.
The countries that you're in.
No.
Nothing short of a surprise I mean pretty much in line with expectation of short on that one we never we are actually great customer service performance overall and the split of the performance of the quarter is inconsistent with our expectations as it shows the short term on the gradual share development is key but nothing of significance the different let's say regions by.
Region by definition, because they're not they haven't they haven't come up with any surprise region by region.
Okay, Great and then last one from me can you give us an update on green cuisine number one how that's doing and number two just how your sustainability initiatives, which you've had a lot of talk about how that's been received by your.
Your retail partner and your consumers and consumers is that something that didn't comes up on the radar in times of stress budget.
Pushing.
Just help us understand where are you positioning yourself.
Okay. Let me start with two questions actually just to understand you well. It was the first one is about <unk>.
Actually in terms of Green cuisine, you know last year, you know to your point I mean, we have had a flat sales in that category declining by 9%. So to your point I think we I mean, we have this share gain of 2%, which is we are the number two player in frozen food plant protein. This year. So we.
We are growing faster than the others. This year were up slightly in terms of market share with a country like Germany for example, performing extremely well growing at 10%.
Sure.
Italy is up as well. So overall you know we are very pleased this being said when you take you know I think when you think the category. So it's a very interesting category and we believe that the category is a long term role to play.
But I think what we also have seen is is after a lot of excitement people started to reconsider that.
How does it need to change which is not unusual by the way I think there's a lot of categories have been through that kind of strength and I think it's up to us leaders to raise the game.
And to come up with the right products.
The right combinations.
The right price and so do I believe that there is a long term future as I said, yes, but.
Definitely you know I think the consumers remind us.
All of us by the way much more than others or others by the way.
That's everything.
Never take for granted which is great. That's exactly what we need to do in terms of in terms of the sustainability well you know we've just published our sustainability report I think it is today.
And I was really invite you Joe to go through.
We believe the headlines what if he stays really strong when you see the numbers we have in terms of Oh, Let's say for example, a sustainable fish in terms of sustainable agriculture in terms of healthy foods in terms of as DTI quite frankly, it's something we can.
I'm, not saying that lightly by the way because.
I'm more of them.
Italy dissatisfied.
But it's it's really impressive.
But to your point about how does he tell them well I can tell you.
The retailers starting with our retailers. They also have their programs.
And they need.
People like us to go.
Wisconsin with programs that are very much in line because they have also their carbon footprint programs and all the rest of it and they need obviously to have a consolidated view. So if people like US you know I can see I will not mention any names, but I can tell you we have very very studies conversation very fruitful.
The conversation with some of these retailers and I think it's only starting.
As far as the consumers are.
As far as the consumer is that are we talking about the consumers I think we can do more we can do better I think when I again, when I see the numbers. The numbers, we have I think we need to do ourselves better job. That's my non satisfactory, but Mike said that is coming back.
We can do a better job at coming with these numbers because these are facts.
I know that you know we perform extremely well with for example Wall Street you know in terms of.
Where do we stand in terms of sustainability, but more to come quite frankly.
I think we are too modest to walk us from that standpoint.
Given the fact, we are where we are coming up with.
We've changed I can't tell you.
And to the satisfaction of the retailers and the consumers and then ultimately it's worth it.
Dysfunction.
Got it. Thank you. Thank you very much the farms.
Please read the report it's really interesting.
This concludes our question and answer session.
Like to turn the conference back over to Stephane Dash maker for any closing remarks.
Thank you operator, and thank you for your participation on today's call.
We got off to a solid start for the year and we remain on track to deliver our promises.
We believe frozen food remains the best value for consumers across food and we remain product category leaders we are.
Our focused and committed to delivering our ambitious financial objective for 'twenty three and beyond.
Thank you all operating back to you.
Yes.
The conference has now concluded.
Thank you for attending today's presentation you may now disconnect.