Birds Eye and Findus owner Nomad Foods has upped its full year earnings expectations after heavy promotions in the UK drove it to a 1.1% rise in organic sales in the first quarter

In the three months to 31 March 2017 Nomad reported a 2.9% decrease in reported revenue to €531m, largely driven by the impact of currencies.

After adjusting for foreign exchange and an extra trading day in the year-ago period, organic revenue growth was 1.1%. The growth was driven by a 3% rise in volume/mix, offset by a 1.9% decline in price.

It has initiated UK price increases as a result of post-Brexit inflation, but these were more than offset by an increase in planned promotions in the UK and the anniversary of unusually low promotional levels in other markets.

Nomad said it expected promotions to “moderate” in the second quarter.

Adjusted EBITDA also decreased by 11% to €89m during the period, while gross profit decreased 7% to €156m and gross margin contracted by 120 basis points to 29.4% hit by currencies and UK promotions.

Nevertheless, Nomad raised its 2017 adjusted EBITDA outlook to a range to a forecast of €315-€325m up from the prior expectation of approximately €315m.

The increase forecast now assumes organic revenue growth at a low-single digit percentage rate.

Nomad chief executive Stéfan Descheemaeker said: “2017 is off to a strong start with organic revenue growing +1.1% in Q1, a marked improvement from recent quarters and particularly encouraging given the later timing of Easter this year versus last.

“Both retailers and consumers are responding well to our targeted “Must Win Battle” activations, which continue to grow as a percentage of our overall portfolio. As expected, Q1 gross margins reflect higher planned promotions to help ease price increases into the UK market.”

Noam Gottesman, Nomad Foods’ co-chairman and founder, added: “Following a successful and encouraging Q1, we are now even more optimistic about our prospects for the balance of the year.

“We look forward to capitalizing on our forward momentum with respect to both continued organic growth, as well as strategic opportunities. Our business is strong, and we believe Stéfan and our entire team are delivering great results and are well-positioned to build long-term value for all of our stakeholders.”

In March Nomad reported full-year revenues were €1.9bn, a 6% slump on €2.1bn in 2015 when including Findus, and adjusted profit for the year was down 2% to €155m.

The decline in top line was driven by the group’s three largest markets: the UK, Italy and Germany.