Q2 2025 Nomad Foods Ltd Earnings Call
Jason English: Greetings and welcome to the Nomad Foods second quarter 2025 question and answer session. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Jason English, Head of Investor Relations. Thank you. You may now begin.
Greetings and welcome to the Nomad Foods. Second quarter, 2025 question and answer session. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded.
Jason English: Good morning, everyone, and thank you for joining us today. I hope everyone has had the chance to read our press release and listen to our prerecorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the prerecorded remarks and the accompanying presentation. At the conclusion of today's live Q&A session, we will also post an audio replay of this call. Please note that during today's Q&A session, we may make 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 risk and uncertainties, which are discussed in our press release, our findings for the SEC, and in our investor presentation, which includes cautionary language. We will also discuss non-IFRS financial measures during the call today.
I would now like to turn the call over to your host. Jason English head of investor relations. Thank you. You may now begin.
Good morning, everyone. And thank you for joining us today. I hope everyone has had a chance to read our press release and listen to our pre-recorded manager remarks, both of which are available on our website. In addition, we have posted a transcript of the pre-recorded remarks and the accompanying presentation at the conclusion of today's live Q&A session. We'll also post an audio replay of this call, please note that during today's Q&A session, we may make 4 looking statements. That are based in our view of the company's prospects. Expectations and attentions at this time, actual results May differ due to risk and uncertainties which are discussed in our press release, our filings with the SEC and in our investor presentation, which includes cautionary language
Jason English: These non-IFRS financial measures should not be considered a replacement for and should be read together with IFRS results. Users can find the IFRS to non-IFRS reconciliations within our earnings release and 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. All adjusted figures have been adjusted primarily for, when applicable, share-based payment expenses and related employer payroll taxes, exceptional items, and foreign currency cancellation charges or gains. Unless otherwise noted, comments from here will refer to those adjusted numbers. Joining me today are Nomad Foods CEO Stefan Descheemaeker and CFO Ruben Baldew. Now, let's get started with our first question. Operator.
We'll also discuss non-ifrs Financial measures during the call today. These non-ifrs Financial measures should be should not be considered replaced before it should be read together with IFRS results. Users can find the IRS to non-ifrs. Reconciliations within our earnings release, and the appendices, at the end of the slide presentation available on our website, please note, that certain financial information. Within this presentation represents a Justice speakers, all adjusted figures. Have an adjusted primarily for when applicable share based payment expenses and related. Employer, payroll taxes. Exceptional items, and foreign currency, cancellation charges, or gains unless otherwise noted comments from here, will refer to those adjusted numbers. Joining me today are Nomad Foods, CEO, Stephane, daesh maker, and CFO Ruben beldo. Now let's get started with our first questioner.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are 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. The first question comes from Andrew Lazar with Barclays. Please go ahead.
Well, now begin the question and answer so.
Using a speaker-phone please pick up your handset before pressing the keys to withdraw your question. Please press star. Then to at this time we will pause momentarily to assemble our roster.
Andrew Lazar: Great. Thanks so much. Thanks again to you guys for putting out the published prepared remarks. That is actually very helpful to us in sort of getting through the results pretty quickly. Maybe Stefan, just as a starting point, I guess what gives you the confidence and sort of the visibility that you finally called the full-year guidance low enough, given the pattern more recently of missing and guiding lower over the past year?
The first question comes from Andrew Lazar with Barclays. Please go ahead.
Stefan Descheemaeker: Thanks, Klemen. It is a great question, and obviously, it is a very important question for us. Let me stand back for just a second. I have been with the company for 10 years since we started. Quite frankly, to your point, I do not think we have been accustomed to this. So it is really something that we need to take into consideration, the guidance. The second point is, at the same time, over the last 10 years, with all the disruptions we have been through, I think we have been very good at learning from all these events. Let me first start with what I think is self-inflicted, and I am really taking this on me. I think we were too optimistic with our ERP implementation. That is the first piece.
Great. Thanks so much and, um, thanks again to you guys for putting out the, uh, the published prepared remarks. It's actually very helpful, um, to us and, and sort of getting through the, the results, pretty quickly. Um, maybe Stefan just as a starting point. Um, I guess what, what gives you the the confidence and sort of the visibility that you finally called the, the full year guidance, low enough, given the you know, the pattern more recently of missing and and guiding lower over the past year.
Uh thanks for the the it's a it's a great question and obviously it's it's a very important question for us and uh well let let me stand back for just a second. You know we I've been with the company for 10 years since we we started and the quite frankly to your point I don't think we've been accustomed to this so it's really something that we need to take into consideration.
Um, the the guidance, the second point is at the same time over the last 10 years, with all the descriptions we've been through, I think we've been very good at learning from our, from our, from from from all these events. So let me let me first start with what I think is self-inflicted and I'm really taking this on me.
Stefan Descheemaeker: At the second level, we also had an excess inventory in Q1 that, quite frankly, we did a poor job at anticipating it. Quite frankly, I am taking these two points with me. I think the lessons, though, is in terms of our ERP, we are slowing down the program just to make sure that we are taking the right level in terms of risk digestion of all the things we are doing, which is absolutely fundamental. I am very pleased with what the team is doing at this stage. In terms of excess inventory and all these things between selling and sell-out, quite frankly, what I have seen is the team is doing a much, much, much better job at reading the visibility between both and, let us say, the dynamics between both, especially during these volatile times.
Stefan Descheemaeker: So that is the first piece, which is really, quite frankly, I would call self-inflicted. The second piece is, especially in Q2, is the weather. For your information, June in Western Europe is one of the hottest June in record in the region. Some differences, obviously, let us say, Nordics was a bit wiser. You take countries like France, like the U.K., like Belgium. The numbers, especially between, let us say, mid-June to mid-July, you have numbers around minus 5%, minus 6%, minus 7% for the market as such, where, quite frankly, we would have expected to be in the region of 1.5% to 2%. At the same time, we have been able to regain market to gain market share, especially in volume, which is good. This is despite the fact that our categories are especially fish and vegetables are under trading, especially during the hot weather.
Uh, that first piece and the second time, the second second level, we also had an excess inventory in q1. That's quite frankly, we, we, we did a poor job at anticipating it and and quite frankly, I'm I'm taking these 2 points with me. I think the lessons though is in terms of our Erp with slowing down, you know, the program. Just to make sure that, you know, we, we taking the right level of the risk, digestion of all the things we're doing, which is absolutely fundamental, and I'm very pleased with what the team is doing at this stage and in terms of, of excess inventory and all these things between selling and sellouts. Quite frankly, what I've seen is the team is doing a much much much, much better job at, you know, reading the visibility between both and the, let's say the Dynamics between both, especially during these volatile times. So that's the first bit, which is really quite frankly, I would call self-inflicted.
The second piece is is um, is the special in Q2 is the weather.
Um, well.
For for information, June in Western Europe.
Is was the hottest June on record in record in in in the in the region.
Some differences obviously not not. Let's say nordics was a bit milder that you take countries like um, like um, France, like UK like Benjamin. Well, the numbers, you know, especially between let's say mid June to Mid July. Well, you have numbers around, you know, minus 5 - 6 - 7 % for the market as such, where quite frankly, we would have expected to be in the, in the region of 1 1.5 to 2%.
Stefan Descheemaeker: That is not, obviously, that is not enough. For us, also, the learning here is, what can we do to make sure that we have a better summer assortment? Because basically, we do not know whether it is going to be a pattern for the future, but we need to be ready and to hedge our bets for the future for 2023 to 2026 and beyond. We have, you know, the teams are preparing things in terms of potatoes, in terms of, let us say, natural fish, and other things that we will mention later. I have to make sure that basically we have either, you know, obviously an additional opportunity for the future, which we always did, and obviously also how to hedge our bets versus what can happen in the future. We do not know that piece.
At the same time, we've been able to regain Market to gain market share, especially in volume. Uh, which is good. And despite the fact that our categories are especially efficient and and vegetables are under trading, you know, they specially during the, the hot weather, but that's not obviously, that's not enough.
so, for us, also the learning here and
okay, what can
To make sure that we have a better summer assortment because basically we don't know whether you know, it's going to be a pattern for the future, but we need to be ready and to hedge your bet for the future for 23, 26 and and Beyond. And we have, you know, the teams after preparing things in terms of potatoes, in terms of, let's say a natural fish and all those things so that, that we mentioned later. So, as to make sure that basically we have either, you know, obviously
Stefan Descheemaeker: Now, obviously, with all these things and with all this volatility, yes, we have decided to take a wider range to take into account what potential risk, obviously, may mostly around additional continuing heatwaves. We have not seen it yet. Let us say, let us face it, it is interesting to see that the first part of July was very hot, and we have seen the numbers immediately in terms of sell-out. The second half was better, was better from our standpoint, obviously, which means milder weather. We have seen immediately, you know, the correlation between the two. This is why, you know, we are taking this range. Obviously, if there is no additional heatwave or something similar, obviously, we are not going to touch, you know, the lower end. That is why we took, you know, a wider range. I think it was not an easy decision.
In additional opportunity for the future which we always did. And um obviously also how to hedge our bet versus what can happen in the future. We don't know that piece.
No. Obviously with, with all these things, and with all these volatility, yes, we have decided to take the wider range to take into account what potential risk, obviously mostly around additional continuing Heat. Wave we haven't seen it yet. Let's say, let's face it. When it's interesting to see that.
Stefan Descheemaeker: We understand that. At the same time, I definitely believe it is the right decision.
Andrew Lazar: Right. Okay. Thanks for that. Then maybe as a follow-up, the midpoint of organic growth guidance for the year would point to about 50 basis points of organic sales growth in the second half. If Q3 ultimately returns to some growth, as I think you hope it does, that would suggest, I guess, not a whole lot of improvement between Q3 and Q4. Am I thinking about that the right way? I would think maybe some of the sell-out demand kind of builds sequentially as you go through the year. I am just curious on your thoughts there. Thank you so much.
First part of July was very hot and we see the numbers immediately in terms of sellout. And the second half was a, was a, was better, was better from our standpoint obviously, which means mind of mind the weather. And we've seen immediately, you know, the the, the correlation between the 2. But this is why, you know, we taking this this, this range obviously, there is no additional Heat Wave or something, similar. Obviously we go. We're going to, we're not going to touch, you know, the lower end, but that's why we took, you know, the a wider range and I think it was not an easy decision. We, we understand that, but at the same time we I definitely believe it's the right decision.
Okay, thank thanks for that and then maybe as a follow-up.
Um the midpoint of organic growth guidance. Um, for the year would point to about 50 basis points of organic sales growth in the second half.
Um if 3 Q ultimately returns to some growth. Um, as I think you're you you hope it does and that would that would suggest I guess not. A whole lot of improvement between 3 q and 4 q.
Uh, am I thinking about that the right way? Or, um, I would think maybe, um,
Stefan Descheemaeker: Yeah. Thanks, Andrew. Let me take that. You are right. Let me also, for the sake of the benefit for the whole group, our range between 0 and minus 2 assumes an H2 between a plus 2 and a half and a minus 1 and a half. Indeed, the midpoint is plus a half. You are right that, normally speaking, we should see growth in Q3, but also to be clear on what Stefan Descheemaeker just said, and I know the optics of the weather, but just some data points. We have seen the market in Q2 in volume minus 1. With Easter, we expect that to be plus 1, 1 and a half, including the Easter calendar.
You know, some of the, some of the, the sellout demand kind of builds sequentially as you go through the year, but, but I'm just curious on your thoughts there. Thank you so much.
Yeah, I think Andrew, let me take that so you're right. Let me also for the sake of the benefit for the whole for the whole group. So our range between zero and minus 2 assumes, an H2 between a plus 2 and a half and a minus 1 and a half and indeed the midpoint is plus a half.
Stefan Descheemaeker: We do not have all the sell-out data yet for all markets, but for the market for which we have it, from mid-June to mid-July, we have seen market at minus 5 and a half. We have seen that, to Stefan Descheemaeker's point, immediately reflected also in our sales, especially in Northwest Europe in big countries for us like the U.K. So that will have a drag on Q3. So we are not committing to growth in Q3. It depends on what Stefan Descheemaeker just said, what are we seeing through the course of the quarter? Yes, and if there is growth in Q3, your mathematics are right, and the midpoint assumes a bit more of a prudent assumption for Q4. But we are also very conscious that we have now lowered the guidance two times, and we will not avoid that happening again.
You arrive at normally speaking, we should see growth in quantity but also to be clear on Stefan just said and I know the Optics of the weather but just some data points. We've seen the markets in quarter to in volume, minus 1 with Easter. We'd expect that to be plus 1 1 and a half including the Easter effect.
For the market for which we have it.
Andrew Lazar: Great. Thanks so much.
From mid June to Mid July. We've seen Market at minus 5 and a half, and we've seen that 27 point, immediately reflected also in our sales, especially in Northwest Europe, in big companies, far as like like UK, so that will have a drag on quarter 3. So we're not committing to growth in quarter 3, depends on what's 7 just set. What are we seeing to the to the course of the quarter? Uh, yes. And if there's 3043 your mathematics are less than the midpoint of shoots a bit more of a good assumption for quarter 4, we're also very conscious that we've not a lot of the guidance 2 times and we will avoid that happening again.
Thanks so much.
Operator: Our next question comes from Steve Powers with Deutsche Bank. Please go ahead.
Our next question comes from Steve Powers with Deutsche Bank, please go ahead.
Andrew Lazar: Great. Thank you very much. Ruben, just to confirm on your Q3 commentary, you fully understand the marketplace trends into the quarter and the dynamics, but you are lapping the ERP supply disruption of a year ago. I think that was about a 2.5 point negative to last year's sales versus consumption. Just want to clarify that and make sure that comparison still factors into your outlook.
Great. Thank you very much. Um, re re re re just to, to, to confirm and and uh, on your 3 Hugh commentary you are
um, fully understand the marketplace Trends into the quarter and the Dynamics, but you are lapping the, the, the, the Erp Supply disruption of a year ago, I think that was about a
2 and a half Point, um, negative to last year's.
Stefan Descheemaeker: Yeah, that's correct. So we indeed have the ERP lag, which was last year in August and in September, and that was 2.5%. So also, the numbers I just quoted, the 2.5% on the top end of the range and the minus 1.5% on the bottom end of the range, actually, underlying are a bit worse. So you roughly talk about the top end is around 1.5% and the bottom end around minus 2.5%. So we will have a favorable comparator, although, again, I have to repeat that what we have seen in July so far was a weak start, especially in the U.K.
Uh, sales versus versus consumption, just want to clarify that and make sure that that that you know, that that comparison still factors into your outlook.
Andrew Lazar: Okay. Understood. Thank you. The broader question that we are, maybe you could talk a little bit more about the inflationary pressures you have seen build of late and how those are likely to flow through 2025 and then carry over into 2026. I know it is very early, but just any kind of round numbers in terms of the magnitude of pricing that you would be considering in 2026 at this point, assuming that the trends hold. Thank you.
Yeah, that's correct. So we indeed have the your feedback which was lost here in August and in September and that was 2 and a half percent. So, also the numbers I just quoted at 2 and a half on the top end of the range and the minus 1 and a half on the bottom end of the range. Actually, in the line are a bit worse. So you roughly talk about. The top end is around 1 and a half and, and the bottom end around minus 2 and a half, so we'll have that Facebook comparator. Although, again, I have to repeat that what we've seen in July so far. Was a weak start, especially in, in the UK, okay? Understood. Thank you. Uh, um, the broader question that we're maybe you could talk, um, a little bit more about the inflationary pressures, you've seen builds. Um,
Stefan Descheemaeker: Thank you for asking that question. It is an important question. We started the year, and we started also after Q1 remarks with an inflation assumption of around 2.5%. We saw that going into 4% last quarter. This quarter, we are looking at a full-year inflation of around 4.5%. The additional increase we have seen from 4% to 4.5% is, again, and I know the optics, but if you look at the weather, to Stefan Descheemaeker's point, it has been the hottest summer in Western Europe since ever, the last one was 2003. It is not only the temperature. It is also the dry and the lack of rain. The U.K. has seen 70% more sunshine, which means we have had the worst crop, for example, on peas. That is the main reason why our inflation assumption has moved from 4% to 4.5%.
Of late and, and how those are likely to flow, you know, through 25 and then in in the carry over into 26. And and I know it's very early but just any any kind of round numbers in terms of the the magnitude of of pricing that you would be considering in 26 at this point assuming that the trends. Hold, thank you. Yeah. Thank you for asking.
This questions, it's an important question. So we started the year and we said it also, after quite a long remarks with an inflation Assumption of around 2 and a half percent.
Stefan Descheemaeker: That is also the main reason why you also see the gross margin drop in Q2. Going forward, as we said last time, we will take some price where we are able to do that. For example, we will take some price in the U.K. If you take a step back, we have yearly negotiation cycles, which are mainly in Q1. We do not see this as a reason to go off cycle. A lot of the recovery of inflation we have seen coming through in this year, and as before, we talked about chicken, and now we see some of the crops will have to be taken into pricing for next year. Then your question is, what then about next year? Let us be clear. Our commitment now is, and our focus now is making sure we deliver our commitments for 2025.
We saw that going into 4% last quarter and this quarter, we're looking at a full year, inflation of around 4 and a half percent. The additional increase, we've seen from 4 to 4 and a half is again, and I know the uptick. But if you look at the weather 2 steps point, it has been the hottest, uh, summer in Western Europe since ever. The lot more was 2003. It's not only the, the temperature, it's also the dry um, and the lack of rain. So the UK had seen 70% more Sunshine, which means we've had the worst crop, for example, 1 piece. And that is the main reason why our inflation assumption has moved from 4 to 4 and a half percent. Uh that's also the main reason why you also see the gross margin drop in in quarter 2. Now going forward and as we said last time uh we will take some price where we are able to do that. So for example, we will take some price in the UK. But if you take a step back, we have here in negotiation Cycles which are mainly in quarter 1. Uh and we don't see this as a reason to go upcycle. Uh so a lot of
The recovery of the inflation, we have seen coming through in this year and then before we talked about chicken, and now we see some of the crops, we have to be taken into pricing for for next year. Now then your question is,
Stefan Descheemaeker: We set the right foundation and fundament for 2026. Yes, we will take pricing to recover in 2026, but there are also some other puts and takes, like, for example, also some bonus releases which we had this year, which will be a bit of a headwind next year.
Andrew Lazar: Okay. Thank you very much. I'll pass it on. Appreciate it.
Well done about next year. Let's be clear our commitment now it's and, and, and our Focus now is making sure we deliver our commitments for 2025 and we set the right foundation and settlement for 2026. Yes, we will take pricing to recover from 26, but there are also some other puts and takes like, for example, some bonus release releases, which we had this year, which will be a bit of a help in next year.
Okay, thank you very much. I'll pass it on, appreciate it.
Operator: Our next question comes from Robert Dickerson with Jefferies. Please go ahead.
All right, our next question comes from Scott. Mark with Jeffrey's, please go ahead.
Robert Dickerson: Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask you about, you have made some comments in the prepared remarks just about some of the SG&A savings and, you know, targeted overhead expense reductions. Maybe just wondering if you can kind of share any more details around some of those initiatives and how we should be thinking about those for the remainder of this year and then into next year.
Hey, good morning. Thanks so much for taking your questions.
Stefan Descheemaeker: Yeah. Thank you. We have indeed seen, and you've seen it also in our presentation, reduction in SG&A. Let us also be clear that is driven predominantly by overhead, so not by AMP, but by overhead. Yes, there is an impact of some bonus releases, and I do not want to go into detail of how much is what, but there is a substantial saving also because of our focus on cost competitiveness and our focus on bringing indirects down after inflation, so compensating for inflation. That also links to the previous question in terms of pricing and recovery. Yes, we will be taking pricing, but we are also conscious that we need to be cost competitive and do not want to have overpricing debts versus our competition.
First thing I wanted to ask you about you made some comments in the prepared remarks just about some of the uh, sgna savings and you know, targeted overhead, expense reductions. Um, maybe just wondering if you can kind of share any more details around some of those initiatives and how we should be thinking about those for the remainder of this year. And then into next year
Yeah, thank you.
We have indeed.
Stefan Descheemaeker: Some of the savings we have been driving, like reductions in some of our support functions, some synergies we saw in some go-to-market organizations, will continue into 2026 as well.
To declare that is driven predominantly by over it. So not buy any but by overheads. Yes, there is an impact of some bonus releases and I don't want to go into detail of how much it was, but there's a substantial saving also because of our focus on cost competitiveness and our focus on bringing indirect down after inflation. So compensating for inflation. And it also links to the pre previous question in terms of pricing and Recovery yet we will be taking pricing but we're also conscious that we need to be cost competitive and don't want to have a over price index versus our competition. So some of the savings we have been driving like reductions in some of our support functions, some synergies, we saw and some go to market organizations will continue into uh into 26 as well.
Robert Dickerson: Understood. Thanks for that. Next question I wanted to ask about is just around some of the innovations. There was some commentary around, you know, in 2024, I think you said about 10% of sales were from innovation and renovation. This year, that is expected to nearly double. Just wondering if you can kind of share some thoughts around the innovation pipeline, and kind of how you see that shaping up for the rest of this year as well as next year. Thanks.
Stefan Descheemaeker: Well, to your point, let me split it in between these two pieces. This year, obviously, is going to be higher than that in the combination of renovation and innovation. Both are equally important for us because renovation is absolutely fundamental in terms of making sure that we keep, we increase our superiority vis-à-vis our main competitors, i.e., private label. That's a key piece. We have a very, very aggressive program in terms of making sure that, obviously, in terms, you know, that we would be superior or equal, but definitely superior in terms of our muscle battle. That's the first piece. That program is going to gauge, more to come, obviously, in the coming quarters. In terms of innovation, yes, the number, little by little, is increasing.
Understood thanks for that. Um, next question, I wanted to ask about, um, it's just around some of the Innovations. Uh, there were some commentary around, um, you know, and, uh, 2024, I think you said about 10% of sales were from Innovation and renovation this year, that's expected to to, to nearly double. Um, just wondering if you can kind of share some thoughts around the Innovation pipeline, uh, and kind of how you see that shaping up for the rest of this year, as well as next year, thanks.
Stefan Descheemaeker: We win the regional floor of 6.5%, which is a big difference compared to where we were in 2022, 2023, which was which had gone down big time, especially during that time where price was the only thing that mattered for the retailers and the consumers. In terms of innovation, you've seen the series of things that we're doing in terms of chicken, for example, in terms of fish. I mean, a lot of innovation in terms of snacking, which is a new area for us. We were very much focused in terms of family mealtime. I think there is a great opportunity for us in frozen food to go with the snacking. We're really starting this, especially in Italy with fish strips and other things like that the same way. A lot of things, quite frankly, at this stage, protein bowls is great as well.
Went to your point. Then, let me, uh, let me split it in between the 2 pieces this year. Obviously, it's going to be higher than that. In combination of renovation, Innovation. And both are equally important for us, because renovation is absolutely fundamental in terms of making sure that we we keep we increase our superiority visibility or visibly, our main competitors are in private label and that's the key piece that we have a very, very aggressive program in terms of making sure that the obviously in terms you know, that we would be Superior or equal, but definitely the Superior in terms of almost battles. That's the first piece and that program is well, engaged more to come, obviously in the coming in the coming quarters in terms of of of innovation. Yes, the number little by little it is increasing. We, when the wheel is not now 6.5%, which is a big difference compared to where we were, you know, in 2223. Which, which was, which has gone down big time, especially during that time, where where price was, the only thing that matters for the retailers and the consumers? And so in terms of of the
Innovation, well, you've seen that. The city is not things that we're doing in terms of of chicken, for example, in terms of of fish, I mean, a lot of, you know, innovation in terms of snacking, which is a new area for us.
Stefan Descheemaeker: It's something that we're going to launch now in the next few weeks in the U.K., in the Netherlands, in Belgium. The countries are very excited by that. If successful, and we think it's going to be successful, obviously, more to come in the coming years because, obviously, also something we're doing well and better and better is the move from one country to another through a lift and launch. It's successful in one country. Obviously, we can go to other countries. That program, I mean, took a bit of time. I think it was a bit of we were so focused on the muscle battle that basically, where the rigor was not probably great in terms of innovation, it has changed. It is changing. We have the muscle battle. We have the growth for the growth platforms in the new countries. That is making a difference.
So we were very much focused on in terms of family meal time, I think there is a great opportunity for us in in frozen food to go with with snacking. And we really starting this, you know, it's especially in Italy with fish strips and and all the things like that, the same the same way. So a lot of things, you know, quite frankly at this stage uh protein B is great as well. It's something that we're going to launch on the next few weeks in the UK in Netherlands, in in Belgium, the countries are very excited about that and then it's successful. And we think it's good to be successful. You see most of them in the in the, in the in the coming years because obviously also something we're doing well and better and better is the the move from 1 country to another through a a list and launched. Its successful in 1 country, obviously we can go to other countries. So the program, you know I mean it took a bit of time I think it was a bit of we were so focused on the Muslim battles that basically we as the rigor was not probably great. In terms of innovation, it has changed. It is changing. We have the Muslim
We have the growth, the growth Platforms in the new countries and that it's making a difference.
Robert Dickerson: Understood. We will pass it on. Thanks so much.
Understood. We'll pass it on. Thanks so much.
Operator: Our next question comes from John Baumgartner with Mizuho. Please go ahead.
Our next question comes from John, Baumgartner with mizuho, please go ahead.
Andrew Lazar: Good morning. Thanks for the question. First off, Ruben, just coming back to the comments on productivity, I am wondering if you can discuss some of the newer initiatives. I think that this supply chain optimization program and the facility closure in Sweden, can you elaborate a bit on this plan? What else is involved in the program, and how should we think about the structural benefits?
Good morning. Thanks for the question.
Stefan Descheemaeker: Yes. Thank you for asking the question. What we need now is a closure in a small factory in the Nordics. We have discussed, in some other ones and in other discussions before, our overall network. We actually see a program on a couple of axes. One is a procurement, where I think we have already made great steps, but there is more to come, which we can also drive in the future years. The second benefit is on network, where we have to look at our total complexity of our network, the number of sites as well within a site, what we can do to optimize there. I have not been personally here in the role.
Um, first off uh Ruben just you know, coming back to the comments on on productivity. Uh, I'm wondering if you can discuss some of the newer initiatives. I think that this supply chain optimization program and the the facility closure in Sweden. Can you elaborate a bit on this plan? What else is involved in the program at? How should we think about the, the structural benefits?
Stefan Descheemaeker: As you have also heard in our prepared remarks, together with Stefan Descheemaeker, together with our exec, with our Chief Supply Chain Officer, we are embarking on a program to drive more cost competitive out of those programs. We are keen to share more with you in the second half of the year.
Regards to Chiefs of blackening, we are embarking on a program to drive more Costco competitiveness out of those programs, and we are keen to share more with you in the second half of the year.
Andrew Lazar: Okay. Coming back to innovation, can you walk through the future foods lab you have established? What categories are you focusing on there? Do you plan on taking ownership interest in any of the partners? Is it just more of a commercialization relationship? Any more detail there would be helpful. Thank you.
Stefan Descheemaeker: It is very interesting. It is obviously early in the game for us, but we have indeed been learning how to partner with the with actually, I would put it that way. We were very much, you know, focused on ourselves for many years. I think we have evolved and we are learning now how to deal with with new guys in the in the in the as a startup. We have some more to come in food service probably in the coming months. We have a first example. I will spare you the detail at this stage because it seems very, very highly confidential. But definitely, it is the kind of things we have learned a lot with a with a startup. We are going to start with with them in some countries where food service is present for us.
Okay. And then coming back to Innovation, can you can you walk through the future Foods, lab you've established? Um, you know, what categories are you focusing on there? Uh, do you plan on taking ownership interest in any of the partners? Is it just more of a commercialization relationship just you know, any any more detail that would be helpful. Thank you.
Yeah, it's it's, it's very interesting. It's, it's obviously early in the game for us, but we we indeed, we learning how to partner with the width. We, I actually I went with that way. We were very much, you know,
Stefan Descheemaeker: You know that food service is is big for us in in the Southeastern Europe, in Switzerland, in the Nordics, and also in Spain, Portugal. So we are going to start with that, with more to come in others. Again, I do not want to come with a name right now because it is not, you know, it is still confidential. But definitely, it is going to come in the coming months. The more to come up with others. We are also developing, by the way, pilot plans, which also is going to help us and our partners to move faster in terms of innovation. I think the speed at which, you know, innovation is taking place is absolutely critical. With these kind of steps, we also can move faster. Then, obviously, now we will be closer to the market.
Focused on ourselves for many years and I think we have evolved. And we learning know how to deal with with new guys in the um, in the um, in the in the as a startup, we have some more to come in Food Service, probably in the coming months. We'll have a first example. Uh, I will spare you, the detail of this is because it feels very, very, highly confidential. But definitely, it's a kind of things. We've learned a lot with the, with the, with the startup. And we're going to start with with them in some countries where with food service is present for us, you know, that food service is is big for us in, um, in the Southeast and Europe in Switzerland, in the nordics and also, in Spain, Portugal. So we're going to start with that with more to come in orders. But again, I don't want to die to, to come with a with a name right now because it's
Because, you know, uh, it's it's still confidential, but definitely it is going to come with the coming in the coming months, and the more to come up with others.
Stefan Descheemaeker: With the other things, it is the, you know, this portal is very interesting. We have received a lot of attention from a lot of people. Now we are in the process, obviously, of selecting the guys with whom we want to work. But it is very promising.
That we also developing by the way pilot plants which also is going to help us and our partners to move faster. Inter in terms of innovation, I think the speed at which, you know, Innovation is taking place is absolutely critical. And with this kind of steps we also can move faster and then we close into the market, but there will be other things. Uh, it's the, the, you know, this this portal is very interesting. We, we received a lot of attention from a lot of people and now, in the process of selecting, with the guys with whom we want to work but that's a it's it's very promising.
Robert Dickerson: Thank you.
Thank you.
Operator: Again, if you have a question, please press star then one. Our next question comes from Jon Tanwanteng with CJS Securities. Please go ahead.
Again, if you have a question, please press star, then 1.
Robert Dickerson: Hi. Good morning. Thank you for taking my questions. I was wondering if you could talk about the portfolio. Maybe this is a longer-term question, just how you might be dealing with hotter weather, hotter weather on average, structurally versus, you know, the true outliers like you saw in Q2. We have seen more heatwaves in recent years. If that is something you need to prepare for, either in the portfolio, I do not know if it is moving ice cream out of the Adriatics or doing something with your crops and supply chain to position for that. Just help us understand the long-term positioning and how you might be dealing with that, if at all. Thank you.
Our next question comes from John 10, 101, tang with CJs Securities. Please go ahead.
Hi, good morning. Thank you for taking my questions. I was wondering if you could talk about um, the portfolio and maybe uh, this is a longer term question. Just how you might be dealing with hotter weather hotter weather on average, um, structurally versus you know, the true outliers that you saw on Q2. Um, you know, we've seen more heat waves uh in recent years and and if that's something you need to prepare for, you know, either in the portfolio, I don't know if it's moving ice cream out of the Adriatic or doing something, you know, with with your props and supply chain to, you know, position for that. Um, just help us understand the long-term position.
Stefan Descheemaeker: John, I think it is not only how to move up to these kinds of challenges we have experienced this year. It is also the fact that year in, year out, even with quote-unquote "normal weather," structurally, frozen food is lower in the summer than in the spring or winter, obviously, or later in the year. I think this combination of lower plus, obviously, the heatwave is something that we want to tackle more seriously. The difference compared to many years ago when I think the teams here at the time tried something, we have a, the portfolio is so much wider that we have chicken. We did not have chicken in the past. Chicken does very well, obviously, with barbecue, with marinated chicken, that kind of thing. That is one thing.
Positioning and how you might be dealing with that. Um, if at all, thank you.
Stefan Descheemaeker: We also still have red meat, by the way, that we also can experience much further with the retailers. Let us say something like natural fish. Natural fish exists in many very well-developed countries like Italy, for example. It is not developed at all or not enough in a country like the U.K., where it is mostly coated fish. I can tell you when it is 30 degrees, you do not necessarily want to eat a fish finger or fish stick. Marinated fish or natural fish work very well. Potatoes, in terms of, together with barbecue, is also something we develop a lot. I am not even talking about the ice cream, which is something new for us. We have, obviously, a very strong goal in the Adriatics with Croatia and Bosnia.
You know, I think it's not only, you know, how to move up to the challenge. We expect we experienced this year, it's also the fact that in year out even with quote unquote, a normal weather. Structurally, you know, frozen food is lower in the, in the summer than, in the spring or winter, obviously, of or later the year. And then I think this combination of lower plus, obviously, is the heat wave is something what that we want to tackle. I mean more seriously in the different compared to many years ago. When I think the teams at the time, try something. We we have a, I mean, the opportunity is so much wider that, you know, we have, we have, we have chicken, we didn't have chicken in the bath, you know? And chicken does very well, obviously, with barbecue with marinated chicken, that kind of thing, that's 1 thing. We also still have great Meats, by the way, that we also can experience. I mean, the much further with the with the with the with the retailers. Uh, let's say something like um, National fish natural fish exist in many, it's very
They were very well developed in countries like like Italy. For example, it's not developed the door or not enough, you know, in country in a country like the UK where it's mostly coated fish. Well, you know, I can tell you when, when you study the bridge, you know, you don't necessarily want to to eat the fish finger or fish stick. Well, of course, the let's say, my we need a fish or natural fish. Works very well potatoes. In terms of
Stefan Descheemaeker: A bit accidentally somehow, we started to develop something in Austria, which is doing well because we had very strong people. In Vienna, we had a lot of people coming from Croatia, and it did well. So we are starting to develop these kind of things. Does that mean that we are going to do it with ice cream and others? Not necessarily, but at least we have the assortment today that is available. The first thing we are doing now is we are talking to other countries to see what they see. Also, very importantly, we are also starting the conversation with the trade because it has to be incremental. It can be incremental, but it requires also agility, how to move faster from one season to another.
Stefan Descheemaeker: A lot of things, a lot of opportunities, but definitely frozen food can do well with the hotter weather, with the summer, and more specifically with the wind waves.
Robert Dickerson: Great. That's very helpful, Stefan. Second, just any update on the capital allocation priorities? With the stock indicating down, you've done repurchases, or maybe there's a preference for debt repayment here. Any thoughts there?
Because you had a very strong, let's say um um, a strong, a strong people, so, I mean, so it's in in there now, we had a lot of people coming from Croatia and it did well. So we're starting to develop this kind of things. Does that mean that we're going to do with ice cream in orders? Not necessarily, but at least we have the assortment today that is available. And the the first thing we're doing now is we're talking to other countries to see what what they see. And also very importantly, we also starting the conversation with the with the trade because it has to be incremental and it can be incremental, but it requires also agility how to move faster from 1. 1 seasons can do well with, with, with the hotter, with the with with, with the, with the summer, and more specifically with the with the heat waves.
Stefan Descheemaeker: Yes. So thank you for that. We have done quite a bit of share buybacks in H1, more than 20 million, first the year before. We just announced a dividend. So I think from capital allocation, we have done a lot with buybacks and with dividends. We want to keep our flexibility. In the past, we have shown to be a good M&A and quite being able to acquire good companies. But at this moment, with our current evaluation and also what is out there in the market, it is not that in the short term, there is an M&A pipeline. Whether we are now committing to buyback, that also depends a bit on our overall flexibility.
Great. That that's very helpful to find and then second just any update on the capital I could priorities, um, you know, with the stock indicating down, you've done repurchases, uh, or maybe there's a preference for for that repayment here. Any thoughts there?
Yes.
Quite a bit of.
Uh, share Buybacks in in H1, 100 million years for the year before, less than 20 men. We just announced a dividend. So I think from kind of capital orientation, we've done a lot with BuyBacks and with with different, uh, you know, we want to keep our flexibility in the past. We've shown to be a a good m&a and then quite being able to buy a good company, but at this moment with our current evaluation also, what's out there in the market? It's not that any insurance.
Short term has an m&a pipeline, whether we're now committing to buy back. That's also the event State on our old flexibility.
Robert Dickerson: Great. Thank you.
Great. Thank you.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Stefan Descheemaeker for any closing remarks.
This concludes our question and answer session. I would like to turn the conference back over to Stefan just to make sure for any closing remarks.
Stefan Descheemaeker: Thank you, operator. While I am disappointed by our first-half performance, I remain no less confident in the future that lies ahead of us. We have a great portfolio. We have a strategy that is working, and we have a talented team of people well-equipped for the days of the plans we have in front of us. We have successfully stabilized our market share and have compelling plans to increase our competitiveness in the back half of the year. We are well-positioned to delivering accelerating growth when the disruption subsides. I look forward to demonstrating that with results when we update you again next quarter. Thank you for your time and interest in Nomad Foods.
Thank you, operator. So while I'm I'm disappointed by your first half performance.
I remain with no, no less confident in the future that lies ahead of us.
We have a grateful for you.
We have a strategy that is working and we have a talented team of people. Well, equipped with the plans, we have in front of us.
we have successfully stabilized, our
Has to increase our competitiveness in the back half of the year.
We are well positioned to delivering accelerating growth when the world when the disruption subsides.
I look forward to demonstrating that with results. When we update you again. Next quarter. Thank you for your time and interest in the foods.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference is now concluded. Thank
Thank you for attending today's presentation. You may now disconnect