Just Eat Takeaway delivers better-than-expected H1 loss

Food delivery giant Just Eat Takeaway.com on Tuesday posted a better-than-expected operating loss of €190m as it continued to invest in its businesses and said it had “reached the peak of absolute losses”.

The loss compares with a profit of €205m a year ago and analyst estimates of a €218m loss. Revenue jumped 52% to €2.6bn reflecting strong order growth during the Covid pandemic. Figures were adjusted to reflect the acquisition of US peer GrubHub in June.

On a pre-tax basis, losses widened to €395m from €26m after large investments in its own fleet of delivery couriers and expansion into groceries.

Active consumers increased 21% to 98m, while gross transaction value rose 50% to €14.1bn. Orders rose 51 per cent to 547m.

“Improved profitability will be driven by the growth and increased scale of the business, flexibility from the widening price gap, product and technology improvements, operational efficiencies, as well as fee caps which are expected to partly fall away going forward,” the Amsterdam-based company said.

The company repeated its full-year forecast for an EBITDA loss of 1%-1.5% of its gross transaction value, which was €14.1bn for the six months to June 30, compared with €9.69bn a year ago. It expects order growth of more than 45% for the full year, excluding Grubhub, with gross transaction values including the US business likely to be between €28bn - €30bn.

Just Eat Takeaway, which competes with Uber Eats, Deliveroo and Delivery Hero around the world, said it intends to sell its 33% stake in iFood of Brazi, but had spurned a €2.3bn offer as inadequate.

The company was formed when Dutch firm Takeaway took over UK rival Just Eat in a £6.2bn deal in early 2020, just before the Covid pandemic forced the lockdown of millions of people and the closure of restaurants.

It then snapped up Grubhub for £5.8bn, giving it access to the US market and creating the largest food delivery service outside China, serving customers in 25 countries.

Analysts at Numis marked the shares as 'reduce', saying trading improvement "looks to come primarily from lower fee caps and rebates and increased delivery pricing, where management claim not to have noticed any impact on growth".

"With H1 and 2021 EBITDA losses looking not as bad as indicated in July, the shares may see some support at these depressed levels however with sparing commentary on the US strategy or logistics profitability we find little to reassure us on the more medium-term outlook," they said in a note to clients.

Dan Thomas, analyst at research firm Third Bridge said the investment in delivery and extensive brand marketing was a long-term market share play "but will serve to crimp margins, especially if delivery volumes cannibalise marketplace orders which are significantly more profitable overall".

“Competition in Germany, Just Eat Takeaway’s second highest margin region in H2, will also be a concern. Where Takeaway’s Lieferando brand had previously dominated the market, Delivery Hero’s re-entry will reignite the fight for market share in the country,” he said.