Nomad Foods Limited — 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing. Financial statements are audited and prepared under IFRS; amounts below are in euros unless stated otherwise.
Business context
Nomad is a European frozen-food company with one reported operating segment, “Frozen.” Its brands include Birds Eye, Findus, iglo, Ledo and Frikom. The Fortenova acquisition, completed in September 2021, expanded the business in southeastern Europe and added ice cream; 2022 included a full year of Fortenova results.
Financial performance
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | €2,939.7m | €2,606.6m |
| Gross profit / gross margin | €815.3m / 27.7% | €744.3m / 28.6% |
| Operating profit | €375.4m | €342.7m |
| Net finance costs | €54.4m | €106.0m |
| Profit before tax | €321.0m | €236.7m |
| Profit for the year | €249.8m | €181.0m |
| Basic / diluted EPS | €1.43 / €1.43 | €1.02 / €1.02 |
| Adjusted EBITDA (non-IFRS) | €524.4m | €486.7m |
| Adjusted EBITDA margin (non-IFRS) | 17.8% | 18.7% |
Revenue rose 12.8%, reflecting acquisitions and 1.8% organic growth excluding acquisitions and foreign-exchange translation. Gross margin fell 90 basis points: pricing, promotional investment and mix contributed a 490-basis-point benefit, acquisitions 100 basis points, while cost-of-goods inflation reduced margin by 680 basis points. Adjusted EBITDA increased, but its margin declined.
Operating profit included €48.7m of exceptional items, versus €45.3m in 2021. These included business-transformation costs (€37.0m), Fortenova and Findus Switzerland integration expenses, and a €5.8m impairment of Swedish food-service customer relationships. A €28.9m net gain from legacy settlements—primarily favorable rulings on historic registration-tax claims—partly offset exceptional charges. The filing’s adjusted measures exclude specified exceptional and other items and are not IFRS measures.
Cash flow, debt and liquidity
- Operating cash flow was €303.8m, compared with €306.3m. Working capital increased by €96.8m, versus €23.5m in 2021.
- Investing cash outflow was €78.7m, including €79.1m of capital expenditure. Financing cash outflow was €108.1m. Cash and cash equivalents at year-end were €369.7m on the balance sheet (€366.8m in the cash-flow statement after overdrafts).
- Management reported total liquidity of €540.0m: €369.7m cash, €173.2m available revolving-credit borrowings, less €2.9m overdrafts. It stated available resources should meet requirements for at least 12 months.
- Reported loans and borrowings were €2,164.9m, including lease liabilities and debt discounts; the company reported approximately €2,140.2m of indebtedness under term facilities and no cash drawn on the €175m revolving facility. The separate €800m senior secured notes are due in 2028. Net debt and leverage are not clearly stated in the provided filing text.
- A November 2022 refinancing replaced the existing U.S.-dollar term loan with $700m due 2029 at term SOFR plus 3.75%, and added a €130m term loan due 2029 at EURIBOR plus 3.5%. The other €553.2m euro term loan is due 2028. Variable-rate exposure remains, partly addressed through hedges. The company reported compliance with debt covenants at year-end.
Outlook, risks and other notable disclosures
- Management expected input-cost inflation to persist through 2023 and capital expenditure to increase, including for the multi-year business-transformation program. No specific revenue or earnings guidance is provided in the supplied filing text.
- Management prioritized recovering inflation through pricing, securing alternative fish supplies and accelerating Green Cuisine. It described Russian-sourced fish exposure as material and said diversification would take time; new contracts for ASC-certified farmed pangasius were expected to begin supplying in 2023.
- Key risks include inflation and the ability to pass through costs, fish and other raw-material availability, the Ukraine conflict and sanctions, retailer bargaining power, private-label competition, customer concentration, Brexit-related trade costs, labor and logistics pressures, foreign exchange and interest rates, and acquisition integration.
- Goodwill and intangible assets totaled €4,559.2m, including €2,101.6m goodwill. No impairment was recorded in 2022; the annual valuation depends on projected cash flows and assumptions including an 8.3% pre-tax discount rate and 1.0% long-term growth rate.
- Provisions for uncertain tax positions were €152.9m, amid audits and discussions with tax authorities. The auditor identified goodwill/brand impairment assessment and uncertain tax positions as critical audit matters. PwC issued an unqualified opinion and concluded internal control over financial reporting was effective.
- The company had no current plan to pay ordinary-share dividends. Founder Preferred Shares converted one-for-one into ordinary shares on January 3, 2023; no further preferred-share dividend was due.
Important facts for investors to verify
- How much of reported revenue growth came from acquisitions, currency translation and underlying volume versus pricing, and whether organic growth can persist.
- Whether pricing and mix can continue to offset input-cost inflation without material volume or market-share losses; review gross-margin trends and working-capital needs.
- Debt principal, floating-rate exposure, hedge coverage, covenant headroom and the company’s leverage; reported borrowings include lease liabilities, and net debt is not clearly stated here.
- The timing, cost and expected returns of higher 2023 capital expenditure and the transformation and acquisition-integration programs.
- Progress in diversifying fish sourcing and the potential financial effect of supply disruption, sanctions or further cost increases.
- Assumptions supporting goodwill and brand valuations, and the eventual outcomes of tax audits and the €152.9m uncertain-tax-position provision.