Nomad Foods, the owner of Birds Eye, Findus and Goodfella’s pizzas, has seen a sharp rise in sales after it increased prices by 18%, amid political scrutiny over food pricing.
The business, which supplies the UK’s major supermarkets, said sales had risen by 8.6% in the three months to the end of June. The number of items sold dropped by 9.4%, but profits rose by 6.8% to €210m.
The figures emerged as the UK’s competition watchdog investigates food retailers and their suppliers in 10 product categories, including milk, bread, and ready meals, as part of efforts to ensure that households benefit from competitive prices as cost inflation softens. Prices are still rising, but inflation rate has fallen, running at 7.9% in June.
Nomad said its price increases had been “positioned solely to recover our higher raw material costs” and that its profit margins had remained steady year-on-year after a drop in 2022. It said the boost to sales in the current quarter came from price increases introduced in the second half of last year.
Nomad was founded by British-born serial deal maker Martin Franklin and the British-and US hedge fund boss Noam Gottesman and is listed on the Nasdaq in New York, valued at $3.2bn.
Gottesman, Nomad Foods’ co-chairman, said: “Nomad Foods again reported a strong performance this quarter. We delivered strong organic revenue growth while protecting our gross margin through pricing and cost discipline.”
Last month the Competition and Markets Authority said it did not find that weak competition among the major food retailers had driven the historically high food price inflation that has emerged in the past 18 months, quashing accusations that retailers were engaged in “greedflation”.
Retailers have faced criticism from MPs over high prices after a combination of rising energy, labour and raw material costs caused by a mix of the Covid pandemic, Brexit, the war in Ukraine and extreme weather prompted by climate change sent food price inflation into double figures last year.
The major supermarkets have said their profit margins are less than 4% and pointed to the double-digit profit margins of major grocery brand owners such as Unilever as household food bills have soared.
Last month, the maker of Marmite, Dove soap and Ben & Jerry’s ice-cream, Unilever, reported rising revenues after it increased prices by nearly 10%, even as consumers squeezed by the cost of living crisis bought fewer products.
A spokesperson for Nomad said: “Our profitability has been under pressure for two years due to post-pandemic raw material inflation. This worsened considerably last year due to the conflict in Ukraine.
“Last year, we saw extraordinary raw material inflation across all key categories. As a result, our price increases from last year were broadly applied across all categories and across all markets.”
