Navigating Contradictions: Insights from the Q1 2025 Earnings Call on Growth, Pricing, and Strategy

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Sales Performance and Market Conditions:
- Nomad Foods reported a 3% decrease in reported net revenues to EUR 760 million in Q1 2025, with organic sales declining by 3.6%.
- This decline was due to greater-than-expected retail inventory destocking across Europe, increased value-seeking behavior by consumers, and higher input costs.

Gross Margin Expansion:
- The company's gross margin expanded by 90 basis points year-on-year to 27.8%.
- Productivity savings from the supply chain and lapping a negative inventory revaluation headwind contributed to this expansion.

Adjusted EBITDA and EPS Decline:
- Adjusted EBITDA decreased by 1.8% year-on-year to EUR 120 million, while adjusted EPS fell by 5.4% to EUR 0.35.
- The decline in EBITDA was due to the net sales contraction, despite efforts to offset input cost pressure with targeted pricing.

Shareholder Returns and Cash Flow:
- Nomad Foods returned EUR 74 million to shareholders in the first quarter, a 152% increase from the previous year.
- The company repurchased EUR 49 million of shares and paid out EUR 25 million in dividends, despite a higher working capital pressuring free cash flow conversion.

Investment in Brands and Product Innovations:
- The company continues to invest behind its brands and product innovations, with double-digit increases in A&P expenses.
- Despite facing headwinds, Nomad Foods is focused on long-term business health through investments in marketing, merchandising, innovation, and renovation.