BERLIN (dpa-AFX) - The cooking box manufacturer Hellofresh continues to struggle with weak demand in its core business. Operating profit fell significantly in the second quarter - but not as much as experts had feared. Due to the continuing decline in demand for cooking boxes, the company wants to focus even more on ready meals. The news was initially well received on the stock market. The shares, which have been under heavy pressure so far this year, rose significantly on the Tradegate trading platform.

In the medium term, the so-called "ReadyToEat" (RTE) business should make the largest contribution to absolute profit growth, writes Group CEO Dominik Richter in a letter to shareholders, which is available to the financial news agency dpa-AFX. "In view of the fact that the profitability per customer unit is at least as attractive as with cooking boxes, we expect the margins of the RTE product category to reach at least the level of cooking boxes."

In contrast, the Berlin-based group is more cautious about the prospects for the cooking boxes segment. According to a statement also sent out in the second quarter, the market for this product group will "consolidate to a new high". In the letter to shareholders, the Management Board explains that it would like to reduce costs and focus more on automation. Planned investments are also to be reviewed.

"Cooking boxes are responsible for the biggest negative impact on our financial results in recent times, as both sales and profit margins have fallen short of our expectations from a few years ago," the letter to shareholders continues. Hellofresh continues to suffer from the consumer slump - and demand is not developing as hoped following the end of the coronavirus pandemic.

The cooking box business had given the Group a significant boost when restaurants were closed and people had to stay at home due to lockdown restrictions. Consumers ordered significantly more than before and Hellofresh was unable to keep up with the production of its boxes. However, when the pandemic ended, people started eating out again - and turned their backs on Hellofresh. "With hindsight, we now realize that we were too optimistic when predicting the future volume of new customers - based on the situation shortly after the pandemic."

Even the aggressive discounts that the Group used in the past to attract new customers in particular could not change the loss of customers. In future, "high-value" customers are to be targeted more specifically and discounts reduced in return, according to the letter to shareholders. The comparatively high marketing expenditure has been a thorn in the side of analysts and investors in recent years.

In recent months, the Group has struggled with a steadily declining number of customers. At the beginning of March, the Management Board then scrapped its medium-term targets and decided to stop communicating customer figures. As a result, Hellofresh's share price plummeted by almost 50 percent in just one day. Analysts criticized the credibility of the managers: in the previous months, the management had repeatedly reaffirmed its targets, only for them to be withdrawn shortly afterwards, wrote analyst Simon Baker from French bank Societe Generale.

However, other key figures also paint a gloomy picture. In the second quarter, the number of orders and meals continued to fall, according to a press release issued on Tuesday. At the same time, however, the average order value is rising because customers are ordering more ready meals and the number of more expensive meals and additional products is increasing. At Group level, turnover for the three months to the end of June rose by just under two percent year-on-year to 1.95 billion euros.

However, earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for special effects fell by almost a quarter to 146 million euros, as high production costs and expenses in the start-up phase of certain production facilities continue to have a negative impact. However, Hellofresh's operating profit was better than expected: Analysts had feared an even more drastic decline on average. On balance, the Group earned 8.9 million euros after 66.3 million euros in the previous year.

In an initial reaction, Hellofresh shares rose by up to nine percent to 5.90 euros on the Tradegate trading platform compared to Monday's Xetra close. The share has thus recovered further from its annual low of 4.422 euros, to which it fell at the end of June. Despite the recent recovery, however, the share price is still well below the high for the year of EUR 14.50 at the beginning of January.

The record high of 97.50 euros from the height of the coronavirus pandemic is miles away. At that time, the Hellofresh business was booming. At times, the stock was worth around 17 billion euros and was listed on the DAX. Most recently, Hellofresh was worth less than one billion euros. The company was able to break this mark again on Tuesday with a significant rise in the share price./ngu/zb/mis