Earnings Call Transcript - NOMD Q1 2023

Operator, Operator

Good morning and welcome to the Nomad Foods' First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Anthony Bucalo, Head of Investor Relations. Please go ahead.

Anthony Bucalo, Head of Investor Relations

Hello and welcome to the Nomad Foods' First Quarter 2023 Earnings Call. I'm Anthony Bucalo, Head of Investor Relations and I'm joined on the call by Stefan Descheemaeker, our CEO; and Samy Zekhout, our CFO. Before we begin, I would like to draw your attention to the disclaimer on slide two of our presentation. This conference call may include forward-looking statements that are based on our view of the company's prospects, expectations, and intentions at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC, and this slide in our investor presentation, which includes cautionary language. We will also discuss non-IFRS financial measures during the call today. These non-IFRS financial measures should not be considered a replacement for and should be read together with IFRS results. Users can find the IFRS to non-IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represents adjusted figures for 2021 and 2022. All adjusted figures have been adjusted for exceptional items, acquisition-related costs, share-based payment, and related expenses as well as non-cash FX gains or losses. Unless otherwise noted, comments from here on will refer to those adjusted numbers. With that, I will hand you over to Stefan.

Stefan Descheemaeker, CEO

Thank you, Tony, and thank you for joining us on the call today. Nomad had a solid start to the year as our sales momentum from the second half of last year continued in the first quarter. Additionally, our teams did an excellent job executing the strategies we announced at CAGNY in February. I'm pleased with the performance of the great people across Nomad who delivered excellent results to start the year off right. Last year we faced a difficult environment brought on by post-COVID inflation and the outbreak of the Ukraine war. We adapted to confront these challenges last year and put new plans in place this year to make Nomad even more resilient and positioned for growth. Overall, we believe our Q1 results demonstrate that we are on the right path to accomplish our goals. In Q1, our revenues grew organically 8%, another sequential quarter of improving sales trends. The benefits of our pricing strategy and disciplined supply chain management were visible in improving adjusted gross margin and EBITDA margin, both of which grew 100 basis points year-on-year. We also delivered adjusted EPS of EUR0.46, which grew 7% in the quarter. As we shared at CAGNY in February, we have three central priorities for this year. Our first priority is to strengthen our commercial approach with additional A&P investments for our brands while adding affordability options for stressed consumers. This includes not just innovation, but renovation for many of our best-selling products. Our second priority is to leverage the efficient savings from our world-class supply chain to help fund growth. Our final priority is execution of our revenue growth management strategy, designed to recoup costs through pricing and maximize the value of our portfolio. I'm happy to say we are on course for all three. Our new A&P investment is reaching the market now in Q2 and will be fully deployed in the third and fourth quarters. Our supply chain is performing well, delivering excellent service and efficiently managing our procurement process. Finally, our revenue growth management execution is helping drive price and mix further narrowing our cost gaps. Overall, Nomad is in a much better position today than at this time last year. We are highly encouraged by the resilience of our top line and the improvement in our margins. '23 will have its challenges. But with our improving fundamentals and expected step up in cash flow and strengthening balance sheet, we are highly optimistic about this year and beyond. We are on track to meet our guidance expectations. With that, I'd like to recap our first quarter key financial metrics beginning with revenues. Q1 revenues grew 5.8%, with strong pricing more than offsetting volume declines. Organic sales grew 8%. However, we experienced 2.2 percentage points of negative FX impact. Adjusted gross margins grew 100 basis points to 28.9%, driven by our pricing initiatives and supply chain execution. Adjusted EBITDA grew 11% to EUR146 million, with margin improving 100 basis points. And finally adjusted EPS was EUR0.46 per share, up 7% versus last year. At current US dollar spot rates, our Q1 adjusted EPS was $0.51. Our revenue performance was strong in the first quarter as our pricing from the second half of 2022 rolled over into the start of the year. This was the fourth sequential quarter of improving organic sales trends against a challenging consumer environment where mid-teens pricing more than offset a mid-single digit volume decline as our volumes were not impacted by elasticity and price gaps with competition. We have further narrowed the gap between our price and input costs this quarter with positive margin expansion. Raw material prices are moderating. However, we are not seeing meaningful deflation. This all plans to recoup our input cost inflation from 2022 and 2023 by year-end. This will help fund our plans for stepped-up investments in A&P and innovation. This is crucial for the health of our business. Our world-class supply chain continues to show positive results with delivered service to our customers at a multi-year high, with levels above 97%, up 100 basis points from last year. Additionally, we remain disciplined on procurement and we are covered for nearly 80% of materials for the year. We're giving ourselves more flexibility on coverage than in previous years, becoming more analytical and strategic on how we acquire raw materials. We lost about 1% value share this quarter. This loss was a direct impact of both elasticity in the price gaps which have not yet narrowed versus our private label competition. However, our new A&P investment hits the market starting late in Q2 and will be rolling out across the balance of the year. With greater brand support and innovation, we expect to reverse these losses as the year progresses. Finally, with our strong EPS delivery this quarter, we are raising the lower end of our 2023 adjusted EPS guidance to EUR1.52 from EUR1.50. Our original range of EUR1.50 to EUR1.55 now stands at EUR1.52 to EUR1.55. This represents an adjusted EPS range of $1.67 to $1.71 at current US dollar spot rates and excludes any impact of capital allocation. This quarter, we benefited from the adjustments we made to our business model last year combined with the new plans we have rolled out this year. We plan to return to our historic margins over time and we made progress during the quarter. In Q1, margin benefited from our pricing from the second half of 2022. Additionally, we showed the benefits of supply chain discipline and cost savings programs. As a result, our gross margin expanded organically for the first time since the end of 2020. With a continued focus on price realization and supply chain discipline, a good early start puts us on target to meet our goal of flat adjusted gross margins for 2023. The consumer is at the center of everything we do, and we kicked off our four-digit strategy designed to attract and retain consumers during this period of high inflation across Europe. We have adjusted many of our promotions on key items in selective markets to keep consumers in our portfolio. Additionally, our expanded above and below the line communication strategies are carrying the message of frozen food's intrinsic values, including lower waste, high nutrition, product versatility, and good value. We are seeing strong initial evidence that our message is taking root. Long-term, we think the strategy gives us the opportunity to reconnect with consumers and strengthen loyalty to our brands. Finally, we're seeing the full benefits of the farmed fish supply strategy we accelerated after the outbreak of the Ukraine war last year. With our new source of fish, we launched new and innovative products across four of our markets, including the UK, Germany, the Netherlands, and France. We have a scheduled expansion into at least another three new markets this year. The initial results have been very encouraging and we are excited by the innovation opportunities the new supply of high-quality fish provides us. With that, I will now hand the call over to Samy to review our financial results and guidance in more detail.

Samy Zekhout, CFO

Thank you, Stefan, and thank you all for your participation on the call today. Turning to slide six, I will provide more detail on our key first quarter operating metrics, beginning with reported revenues, which increased 5.8% to EUR775 million, up 8% organically. First quarter revenues were negatively impacted by 2.2% unfavourable effects. We saw elasticity in our top line performance as volumes came under pressure due to price increases and the persistent price gap with private label. These volume declines were expected and are in line with expectations as we aim to recover cumulative cost increases from last year and this year. These volume declines impacted our market share, which was off about one point for the quarter. As we communicated at CAGNY, we expect market share trends to improve sequentially this year, driven by our innovation efforts on affordability as well as stepped-up A&P investments. We delivered a strong margin performance this quarter. Adjusted gross margin was 28.9%, a 100 basis points increase versus the prior year, reflecting the successful recovery of higher input costs through pricing. We continue to navigate an inflationary environment. In Q1, we saw a benefit in the cost of goods sold from the tail end of cover position from 2022. Looking ahead, while we have strong cover now in place for the rest of 2023, the full effect of inflationary impact on COGS will be realized as the year progresses. As we look out to the rest of the year, we expect to deliver flat gross margins supported by price increases and cost discipline. Moving down to the rest of the P&L, our adjusted gross profit grew 10% to EUR224 million for the first quarter. Adjusted COGS increased to EUR551 million, an increase of 4.3%, up EUR23 million versus last year. Adjusted operating expense of EUR100 million was up 6% year-over-year. Adjusted EBITDA of EUR146 million was up 11% versus last year. Adjusted EBITDA margin landed at 18.9%, an increase of 100 basis points. Finally, our adjusted EPS of EUR0.46 was up 7% in Q1. This translates into $0.51 in US dollar terms at spot rate. Turning to cash flow on slide seven. Cash generation is crucial to the health of our business and remains a top priority as we consider our capital allocation for this year and beyond. In Q1, we generated EUR25 million of adjusted free cash flow for a conversion ratio of 32% versus 62% in Q1 2022. Q1 was adversely impacted by the phasing of inventory receivables and payables in certain markets during the quarter. The adverse phasing of receivables and payables is temporary and should reverse in Q2. We remain on target for our 2023 cash flow guidance and our options for accretive capital allocation remain wide open. CapEx of EUR21 million was flat versus last year. We continue to support strategic investments in the business. Changes in cash tax increased EUR1 million to EUR10 million, while cash interest was down EUR2 million to EUR25 million. As part of our refinancing in November 2022, we will be facing higher cash interest payments on a portion of our debt. As a result, we saw a cash benefit in Q1 before realizing the full impact of higher interest charges in Q2. Last year, our cash generation was negatively impacted by a working capital build to mitigate the possibility of supply shortages in the middle of the year. We are also impacted by the implementation of the Unfair Trade Practice Directive (UTPD) in the EU. This year with more normalized inventory levels and UTPD in the base, we expect cash flow conversion in line with our historical average. With that, let's turn to slide eight to review our 2023 guidance, which we initiated in our 2022 earnings report in February and are updating today. This guidance is based on foreign exchange rates as of May 3rd, 2023. We are updating the original guidance we delivered in our 2022 year-end earnings report. First, we expect organic revenue growth to be in the mid-single-digit range for 2023. We expect our pricing initiatives to more than offset volume declines. We expect cash flow to be in line with our historical performance with working capital and UTPD in the base. We expect our cash conversion ratio to be in the range of 90% to 95%, in line with historical averages. We are raising the bottom end of our original 2023 guidance. We now expect adjusted EPS in a range of EUR1.52 per share to EUR1.55 per share, or $1.67 to $1.71 at current USD spot rates. This replaces our original guidance of EUR1.50 to EUR1.55 and excludes any impact of capital allocation. I will now turn the session over to Q&A. Operator, back to you.

Operator, Operator

We will now begin the question-and-answer session. Our first question will come from Jason English with Goldman Sachs. You may now go ahead.

Jason English, Analyst

Hey, good morning, folks, or perhaps it's good afternoon where you're at. A couple of quick questions. You mentioned, I think, Stefan, this is in your comments, you plan to recoup the inflation incurred in 2022 and 2023 collectively by year-end. My question is, are you expecting to have more list price increases or I believe you've tapered some trade on top of this price increase? Is the anticipation that you'll be able to pull back on some of that trade to get more effectively net price realization by year-end?

Stefan Descheemaeker, CEO

It's a bit of a combination of everything you mentioned. First, we are well on our way to recovering the price increases. Keep in mind that this process started last year, and we have seen positive impacts from 2022. We also had some successful negotiations early this year, so what's left to address is much lower. Additionally, input cost inflation has decelerated more than we anticipated, which is beneficial for us. That's the broader context. While we still have some negotiations to complete, it's nothing compared to last year. Now, regarding consumers, it's more about promotions and revenue growth management, which is becoming an increasingly significant focus for us now and in the future. That's our current position, but perhaps Samy can add further details.

Samy Zekhout, CFO

Yes, Stefan, I think you said most of it. The one thing Jason I would insist on is actually the pressure for the coming quarters is actually much lower than what we had planned, given the what has been executed so far and what we are seeing from an inflation trend. Stefan was alluding to the point of, let's say, revenue growth management strategy, which we are really now leveraging full speed across the market to really make sure that we execute some of these interventions, if you want, on, let's say in the right market and in the right category to remain competitive versus the rest of the market as well. So clearly we are on trend, if not a bit better on that.

Jason English, Analyst

Okay. And you also commented in prepared remarks that private label gaps have not yet narrowed. Is that like they haven't yet narrowed all the way back? Are they narrowing? But just are you seeing progress on that front, I guess, is the core of my question. And with the cost pressure perhaps moderating a bit, does that influence your expectations of how far you expect private label to go in closing those gaps?

Stefan Descheemaeker, CEO

It's a complex question, Jason, because it's not solely up to us; it's affected by other players in the market. We can't predict their actions. What we can say is that we all face similar constraints. The market operates as it does. Our decision, which remains unchanged, is focused on maintaining our gross margins as brand leaders to enable reinvestment. This is crucial for a brand leader, and that's our plan moving forward. What others choose to do regarding their margins is their own matter. We haven't observed a significant reduction in the differences overall yet. It might happen, or it might not, but it's best to ask them about it at some point.

Jason English, Analyst

Indeed, if I get a hold of my will. Thank you very much. I'll pass it on.

John Baumgartner, Analyst

Good morning. Thanks for the question.

Stefan Descheemaeker, CEO

Hey, John.

Samy Zekhout, CFO

Hi, John.

John Baumgartner, Analyst

First off, I want to walk through the Fortenova assets as we're heading into the peak season there and especially as you're lapping a tough comp on the revenue side. Are there any fundamental or structural improvements or enhancements you could highlight that you've implemented that are poised to benefit operations this year on the revenue side?

Stefan Descheemaeker, CEO

Last year was excellent, and we are determined to achieve another strong year this time, regardless of the weather. We've made several improvements aligned with our business model. For instance, we have a significant number of freezers, around 120,000 across the region, some of which were outdated. We're actively upgrading these freezers, which is beneficial for our retailers and consumers. Additionally, we are enhancing the quality of our factories as part of our plan. Another important lesson from last year is the need to manage our inventory of finished goods more effectively, especially for ice cream, which requires being ready for delivery in Q1 and Q2, rather than relying on Q2 and Q3. Last year, we faced some out-of-stock issues because we were not fully aware of this need, but we are learning from that experience. Our team is doing an outstanding job, particularly with the Adriatics, and they have developed a new flavor that is considered one of the best ice creams globally. We have also opened new export opportunities to Austria, where there is a significant Croatian community, especially in Vienna. Our distribution in Austria is strong, so if you're in Vienna, I recommend visiting local stores like SPAR to see our products. We are confident about our prospects and are pleased with our qualitative and quantitative improvements.

John Baumgartner, Analyst

Okay. Thanks for that, Stefan. And then just a follow up, I wanted to ask about the A&P spending. Your categories I wouldn't say are impulse oriented, and I'm curious how long you think it might take to convert your investments into increased takeaway. I mean, are there specific programs you're targeting that you're more optimistic can deliver a reasonably fast payback, whether it's trade or messaging? Just any perspectives on programming would be helpful. Thank you.

Stefan Descheemaeker, CEO

Yeah, I think we have communicated on our clear intent to step up our investment in A&P. As you have seen, I mean, over the past years, we had taken it down really by trying to optimize the overall portfolio. But it's about time that we reinvest behind the assets that we have. And I think there's a number of things that we are really doing now, which is refueling effectively the level of spending behind our must-win battles. We do know that when we invest there, the payback is quite fast and it's strong because the brands are quite strong. But nevertheless, given the fact that the trend has been a bit down over the past year, it's just going to take a bit more time than usual. But clearly that builds up if your sustainable growth as we move forward, investing effectively around equity. I mean, it's very important. The captain is a perfect example of that. We are clearly refueling effect our investment. I mean, there and what pays back a bit faster sometimes is frankly more innovation driven, more effective, targeted to, let's say, coordination between install and equity investment when we try to have a bit of a holistic A&P intervention there where we see faster returns usually within the nine to 12 months, whereas if you want a classic advertising investment on a longer payout there. But we are clearly trying to balance the need for reinvesting behind must-win battles that are absolutely critical to bring them back on par with what is making growth strong and profitable and on top trying to leverage any commercial option related to market dynamics. For instance, let's say clearly cost of living intervention or innovation intervention or the element when we have, BASAR, as an example coming up, of course we'll advertise that and that has a clear return, I mean much faster than others.

Samy Zekhout, CFO

And you will see stepped-up investments starting really end of Q2 and then really Q3 and Q4.

Peter Saleh, Analyst

Great. Thanks for taking the question. I just wanted to ask on the pricing plans, I know you had a mid-teens pricing in the first quarter here. How should we think about your pricing for the balance of the year? Do you anticipate, at this point in time, taking any additional price given you haven't really seen any deflation, maybe some just moderation in commodities? Just trying to understand how you're thinking about the pricing lever for the balance of this year?

Stefan Descheemaeker, CEO

Yeah, as we said earlier, the pricing, if you want that is going to come, is actually much less than what we had originally planned for, for the reason that affected our first tranche that has happened in GFM has gone really well and has passed through. And on top of that, if you want, we see, let's say, a lower pressure on inflation that is putting, if you want the coming burden on the need to recover inflation through pricing lower than planned. So clearly at this very stage, it's definitely within a range of pricing intervention that will be much more moderate over the quarters to come. As we see, there will be very specific because this inflation hits, if you're in a different category in different markets at a different level, and we try to make sure that efficacy will go wherever it makes sense with the intent as well of taking advantage from an inflation standpoint or the fact that we are hedged at about 80%, as we indicated, and we have 20% on hedge and on this unhedged part, we intend to clearly leverage any positive opportunity in the market in case we have access to input costs at a lower price, which will reduce the pressure for pricing in the next quarters. So clearly on par, if not ahead, and at this stage, much more manageable as we move forward.

Cody Ross, Analyst

Good morning. This is Simon Negin filling in for Cody Ross.

Stefan Descheemaeker, CEO

Okay. Hi, Simon.

Simon Negin, Analyst

Hey there. You haven't repurchased shares since first quarter of last year as you focused on securing inventory. When do you anticipate share repurchases being a bigger part of the capital allocation process again?

Stefan Descheemaeker, CEO

Well, we definitely have been considering share repurchase as part of our capital allocation strategy, as we had mentioned many, many times. The focus over the first quarter was clearly to stabilize the business as we are clearly getting into, let's say, inventory and receivable and payable at the time management at the time were executing pricing and securing the supply. As now we're getting out of this, let's say clear transition quarter. Now we clearly have the next quarter to look at different options. I mean, appealing to us whether this is effective share repurchase or other capital allocation strategy. But share repurchase remains very high on our agenda and we've been opportunistic on that. And as the market goes, we will effectively execute our strategy as we move forward on that.

Steve Powers, Analyst

Hey, good afternoon. I wanted to ask about your manufacturing savings that you had targeted to step up in manufacturing savings entering '23. And I just wanted to get a status check on progress there, how much you've already started to receive and that we've seen in the first quarter results versus how much is yet to build over the balance of the year?

Stefan Descheemaeker, CEO

Yeah, definitely. The program is in place. We had different taxes, if you want, of development there. One was the pure manufacturing efficiency in the different sites that we had clearly leveraging all the opportunities to implement our lean program activities in order to clearly reduce the consumption cost overall, taking into account the volume dynamic as much as effectively the utility and the efficiency dynamic, the productivity dynamic that we had. The program is well in place and delivering good savings in line with the plan and it is a well-spread plan over the quarter. So what you see in quarter one is going to spread over the coming quarter. There was another range of intervention that we had made which was more geared on product formulation. And if you are ability to meet the market needs in a very effective way and within that plan, we have made some of the interventions that are gradually being implemented. And you can understand that whenever we touch product, we touch at different parameters such as packaging or go to market and pricing and others, and those are being deployed as we go. But very clearly the investment and the focus is in there. Great team there that is implementing that. The inflation, as we said, I mean is clearly going on the right trend. I mean, at this stage and we have taken opportunity of the market opening to get to have access to input costs at a lower price. And so the saving flow is coming as planned and is reflected effectively on our overall performance as we move forward in line with our expectations.

Samy Zekhout, CFO

On top of that, I also add, you know, logistics. Where we're making a lot of progress savings and still a lot of opportunities ahead of us.

Steve Powers, Analyst

Okay. That's helpful. Maybe if I could the other you'd also communicated at CAGNY, you know, a relatively sizable step up in innovation spending. And I guess similar question, you know, how much of that have we already seen? How much of that is yet to come? And just any early feedback on sort of the return expectations on that investment?

Stefan Descheemaeker, CEO

The first area is our Basa or Pangasius business in continental Europe, which began out of necessity due to the Ukraine war last year. We've shifted from just addressing a need to seizing an opportunity. Since the end of Q3 last year, we have started to develop this segment of our business focused on farmed fish, and the product is excellent. We have launched Basa in four countries: the Netherlands, the UK, Germany, and France, and it's performing well. We're making significant progress and plan to enter three more countries by the end of the year. This represents innovation as it introduces something entirely new rather than replacing existing products. The second aspect involves affordability and we are exploring several intriguing innovations, particularly in the fish category. These are the key areas where we have increased our investment and expect more innovation in the near future. Additionally, we have identified an opportunity with pizza in France, where we previously had no presence. We believe we have a strong case to enter the market with Goodfellas pizza, supported by the right distribution. There's a substantial gap in the market due to competitive factors, and retailers have expressed openness to our entry. We have started to see Goodfellas Pizza being offered with various retailers in France. This too is a form of innovation that incurs no additional costs since the product was simply not available in that country. Given the current cost of living crisis, we are focusing on renovation. Our primary goal is to ensure our brand products excel in packaging and taste. This focus is critical for us in both the short and mid-term. Thus, these are the main areas where we have made investments, with more to come as we approach 2024 and beyond. These themes align well with the current market situation.

Rob Dickerson, Analyst

Great. Thanks so much. Apologies that you already went through all this. I hopped on late. So just kind of a question around trade spending promo kind of vis-a-vis the gross margin. Clearly in the first quarter gross margin was great. I think originally coming out of Q4, you had said there would be like the sequential progression in gross margin. But now gross margin is still flat. So it doesn't seem like there's probably sequential progression really still occurring because a lot of it was front-end loaded. Do you feel like kind of where you see the marketplace today? Kind of what you had budgeted, I guess, in trade promo kind of is steady or do you think you might need a little extra room as you get through the year to maybe lean in to make sure you're getting the velocities? And again just asking kind of as it pertains to the kind of the delta and the gross margin flow. That's it. Thanks so much.

Stefan Descheemaeker, CEO

Yes. Hi, Rob. Yes, it's very much in line, frankly, with what we were expecting. I mean, the one thing, though, that we have looked at more thoroughly in the context that we've been facing with a good quarter behind us is effectively whether looking at our revenue growth management strategy, whether there could be some surgical intervention to be made on some key country category combinations where we are clearly running behind from a share momentum standpoint and looking at opportunities to do so. Don't expect, if you want, moving forward, a massive change there, but much more targeted intervention to really, let's say, maintain a price gap that is, let's say, conducive to growth overall or potentially opportunity to reignite growth on some of the categories where clearly we've taken pricing and clearly we may have to be more competitive from. Otherwise this continues to remain the category that is heavily promotion-driven. We clearly have a very strong promotional plan. I mean, across the rest of the vast majority of the market. But wherever we have an opportunity to be more surgical, to ignite a stronger growth and regain share momentum, definitely we look at that. But as I said, it's going to be more on a country by country, category by category basis.

Rob Dickerson, Analyst

Okay, great. Maybe just a quick clarification follow up. When you talk about the strategic pricing, you know, kind of depending on end market positioning, is that kind of a way from Fortenova. I just think of, you know, kind of handheld ice cream, you know, in Eastern Europe, at the beach like people aren't really buying on promo. So it's really you're kind of talking more about those core categories, really more frozen fish, frozen veg, maybe. Is that right?

Samy Zekhout, CFO

Yeah, we're looking at absolutely we're looking at that. I mean on Fortenova we have actually started the work as well to see if there were opportunities there. More on the growth side, profitable growth side than anything. But I would say the majority of the emphasis on the more core categories, the non-ice cream category.

Jon Tanwanteng, Analyst

Hi. Good morning. Thank you for taking my questions and congrats on the strong results. Samy, I didn't know if you addressed this previously, but did you mention how you're expecting gross margins to trend through the quarters. Just on a cadence perspective? Is there anything different from your normal seasonality or are there some puts and takes that we should be thinking about?

Samy Zekhout, CFO

No, we maintained the guidance, which is effective about flat margin for the year. The bump we had in Q1 was expected and is going to then deliver. I mean, it's going to lead us to deliver in line with expectations on that.

Jon Tanwanteng, Analyst

Okay, great. And can you give us an update by region, what you're seeing, if there's been any surprise in any of your end markets? I know there's been protests in France that have been fairly disruptive to other industries. Just tell me if there's anything that that surprising, either good or bad, in the countries that you're in.

Samy Zekhout, CFO

No, nothing, if you want of a surprise. I mean pretty much in line with the expectation if you want on that one we never we had actually great customer service performance overall and despite of the performance over the quarter has been consistent with our expectation as it shows, if you want on the gradual share development that we see, but nothing of significant.

Stefan Descheemaeker, CEO

The difference is defined region by region, but there haven't been any surprises in any of the regions.

Jon Tanwanteng, Analyst

Okay, great. And then last one for me. Can you give us an update on green cuisine? Number one, how that's doing? And number two, just how your sustainability initiatives, which you've had a lot of and talked about a lot of them, how have those been received by your retail partners and your consumers, your end consumers? Is that something that even comes up on the radar in times of stress budgets and is that you're pushing. Just help us understand where you're positioning is on.

Stefan Descheemaeker, CEO

Okay. Let me start with the two questions. Actually, Jon, if I understand you well, the first one is about Greek cuisine, actually, in terms of green cuisine. You know, last year, you know, to your point, I mean, we had flat sales in the category declining by 9%. So to your point, I think we I mean, we had a share gain of 2%, which is we are the number two player in frozen food plant protein. This year, so we're growing faster than the others this year. We up slightly in terms of market share with a country like Germany, for example, performing extremely well, growing at 10% and share up 10%, Italy is up as well. So overall, you know, we're very pleased. This being said, when you take you know, I think when you take the category, it's a very interesting category. And we really believe that the category has a long-term role to play. But I think what we also have seen is, is after a lot of excitement, people started to reconsider. Their habits need to change, which is not unusual, by the way. I think a lot of categories have been through that kind of trends. And I think it's up to us leaders to raise the game and to come up with the right products, the right combinations, the right price. And so do I believe that there is a long-term future, as I said? Yes. But definitely, you know, I think the consumers remind us, all of us, by the way, much more than others or for others, by the way, that, you know, it's a never take people for granted, which is great. That's exactly what we need to do in terms of sustainability. Well, you know, we've just published our sustainability report, I think it is today. And I would really invite you to go through, you know, at the very least, the headlines. While it is really strong, when you see the numbers we have in terms of, let's say, sustainable fish, in terms of sustainable agriculture, in terms of healthy food, in terms of SBTi, quite frankly, it's something we can well, I'm not saying that lightly, by the way, because I'm more of the, you know, easily dissatisfied. But it's really impressive. So back to your point about how does it sell then? Well, I can tell you, the retailers starting with the retailers, they also have their programs and they need people like us to come with programs that are very much in line because they have also their carbon footprint programs and all the rest of it. And they need obviously to have a consolidated view. So if people like us, you know, I can say I will not mention any names, but I can tell you we have a very, very solid conversation, very fruitful, let's say, conversation with some of these retailers. And I think it's only starting. As far as the consumers are as far as they are the consumers, are we talking about the consumers? I think we can do more. We can do better. I think when I again, when I see the numbers, the numbers we have, I think we need to do ourselves a better job. That's my non-satisfactory part of myself that is coming back where we can do a better job at coming with these numbers because these are facts, you know that you know we perform extremely well with, for example, Wall Street, you know, in terms of where we stand in terms of sustainability, but more to come, quite frankly, I think we are too modest, too modest from that standpoint, given the fact we have we are coming up with. But it will change, I can tell you and through the satisfaction of the retailers the consumers and ultimately towards satisfaction.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Stefan Descheemaeker for any closing remarks.

Stefan Descheemaeker, CEO

Thank you, operator, and thank you for your participation on today's call. We got off to a solid start for the year and we remain on track to deliver our promises. We believe frozen food remains the best value for consumers across food and we remain pro category leaders. We are focused and committed to delivering our ambitious financial objectives for 2023 and beyond. Thank you all. Operator, back to you.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.