(Bloomberg) -- HelloFresh SE shares jumped the most since 2019, paring some of the past year’s huge decline, after the German meal-kit delivery company announced efforts to cut costs and preserve profits.
Adjusted earnings before interest, tax, depreciation and amortization were €146.4 million ($160 million) in the second quarter, the company said in a statement on Tuesday, surpassing analysts’ expectations.
HelloFresh shares soared as much as 23%, its biggest intraday increase since October 2019. The stock was up 9.5% to €5.91 as of 12:30 p.m. in Frankfurt.
The company said it’s shedding costs and re-examining capital expenditures as its core business slipped into a decline. It decided to reduce production capacity for meal kits in North America, which led to a €45 million impairment charge in the first half.
HelloFresh’s shares have declined 76% in the last year. The Berlin-based company has struggled to retain customers as inflation bites, while its sizable investment into the ready-to-eat meal business has squeezed profits even further.
“With the benefit of hindsight, we acknowledge today that we were too optimistic at extrapolating future new customer volumes from a near pandemic baseline,” Chief Executive Officer Dominik Richter said in a letter to shareholders. As the meal-kit market slows, “we are determined to optimize our cost base and adjust to the new normal.”
HelloFresh’s results contained no major surprises, which is “crucial” for rebuilding investors’ confidence after the company lowered outlook in March and November, Bernstein analysts led by Simon Baker wrote in a client note.
Elevated short interest may have also fueled HelloFresh’s advance. Shares out on loan represented about 13% of the stock’s free float as of Friday, according to data from S&P Global Market Intelligence.
Still, HelloFresh is well below its height reached during the Covid-19 pandemic. The stock was excluded from the Stoxx Europe 600 Index in June. Its current market capitalization is €1 billion, compared with a peak of €16.7 billion reached in 2021.
(Updates share move and adds BI comment)
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