Just Eat's delivery rollout boosts revenue but takes a bite from profits
Just Eat reported a leap in interim revenues on Wednesday following the rollout of its delivery service, though costs associated with the expansion almost wiped out profits.
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Revenue for the six month period ended 30 June came in at £464.5m, for an increase of 30% when compared to the same period last year, after the accelerated roll-out of its delivery services, which now covers in excess of 50% of the addressable population in the UK and Australia, helped the company add two million new customers.
However, the FTSE 100-listed company, which accepted an £8.2bn bid from Takeaway.com earlier this week, said profit before tax plummeted by 98% to £0.8m as cost of sales almost doubled from £93.1m to £175.4m, while staff, marketing and overhead costs also rose.
The online takeaway giant has opted to roll out its delivery network in a bid to competed with rivals such as Deliveroo and Uber Eats.
Peter Duffy, interim chief executive of Just Eat, said: "Performance in our UK business strengthened in Q2, our Canadian and European businesses are performing well and Australia has returned to top line growth with our delivery operations achieving gross profitability. These are strong foundations for Just Eat to build on, as the business continues to drive forward."
Just Eat reiterated its full year guidance of revenue in the range of £1.0bn to £1.1bn and uEBITDA in the range of £185m to £205m.
Neil Wilson, chief market analyst at markets.com, said: "Global expansion and fighting off fierce competition is coming at a cost. It is becoming a difficult task in managing growth and building out scale without eroding margins. Heavy investment in its own delivery network may not be the right option but management has stuck to its guns and will invest more heavily in delivery, whilst racing to boost shares, at the expense of profits."
Just Eat's shares were up 1.71% at 762.80p at 0811 BST.