Nomad Foods has injected some upside to its organic growth forecast for 2025 led by innovation, further promotional spending and possibly M&A.
Chief executive Stefan Descheemaeker is betting on making further strides in volume progression in the new fiscal year after three straight quarters of gains as the UK-based frozen foods maker guided to a 1-3% organic growth print.
That would represent an acceleration from the 1% reported this week for 2024, although adjusted EBITDA is expected to come in slightly below last year at 2-4%, compared to the 5% achieved in the prior 12 months.
Investment will be geared toward Nomad Foods’ largest brands and categories – the so-called Must Win Battles where it seeks to maintain and grow market share and sales over competitors – but also what Descheemaeker described as “select growth platforms”.
The “bulk” of the innovation in 2025 will come from the Must Win Battles, which according to Descheemaeker account for around 50% of sales – €3.1bn ($3.3bn) in 2024 based on a 0.3% decline in price/mix and a 1.3% volume increase.
In the final quarter, those numbers were more pronounced at a 1.6% decrease and a 4.7% increase, respectively.
Those are “critically important to our success”, the CEO of the Findus and Iglo brand owner told analysts, adding: “While our focus remains on our Must Win Battles, recently we have been strategically investing behind select growth platforms.
“These are primarily areas where we see opportunities to leverage the capability in one market to expand our presence in another market with a lift-and-launch approach.”
Spending on advertising and promotions (A&P) is expected to once again “outpace sales growth” in the new year after coming in at 4% in 2024 and 14% in 2023, Descheemaeker confirmed.
“Our innovation, meanwhile, jumped from 4.2% in 2023 to 4.8% in 2024 and we expect it to easily exceed 5% in 2025,” he added.
“And when we combine innovation with renovation, we expect our renewal rate, or percentage of sales where our products are new or refreshed, to double from high-single digits in 2024 to mid-to-high teens in 2025.”
While Descheemaeker did not fully commit to making acquisitions this year, he suggested Nomad Foods is open to potential deals, more likely bolt-ons, as the valuation gaps between buyers and sellers start to come down.
Explaining his thinking, the CEO told analysts: “We keep buying back shares, which is the best acquisitions we can do. But also at the same time, I think what we also see is there are some, maybe under the radar screen, things, not shiny objects, that we could consider in our category – new sub-categories in some countries where we have a lot of synergies and that’s the kind of things more and more we are considering.
“No guarantee to do anything but definitely we believe that we have something to offer, which is not necessarily the big names in Europe but other add-ons, deals. And I think by doing so, we could create a nice pipeline of M&A as we’re also creating a pipeline of innovation.”
Nomad Foods’ CFO Ruben Baldew, who has been with the business for around eight months, said that while inflation has slowed somewhat in the last two to three months, pricing might still be needed to offset any headwinds.
At the same time, Baldew downplayed any real impact on the business from the imposition of tariffs this week by the Trump administration on imports into the US should the President extend his tax penalties to Europe.
“Just to be clear, we don’t export into the US. And if you look at our buy-side outside fish, we don’t import ingredients from the US,” the CFO said.
“We don’t see [an] overall big impact on tariffs. The main point is, we don’t see a major impact of retaliation in terms of tariffs.”
