- Delivery platform sees €284 million profit swing H1/H2
- Growth has been slowing for months
- Streamlining business a priority for Just Eat Takeaway
The investment mood music has changed dramatically over the past 12 months, if Just Eat Takeaway’s (JET) update is anything to go by. While orders and GTV (gross transaction value) declined, and missed analyst targets, shares in the business rallied hard in early trade, the London-listed stock jumping nearly 15% to £24.42.
So, what’s changed? As growth has weakened as major economies shifted out of pandemic lockdowns, management has put profits front and centre.
On Wednesday (18 Jan), the Amsterdam-based firm posted adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) for the final six months of 2022 of approximately €150 million, rebounding from a loss of €134 million in the first half, thanks to higher pricing and cost-cutting.
PROFITS ‘MATERIALLY’ BETTER THAN EXPECTED
Analysts at Citi said the result was ‘materially above’ its expectations. Just Eat also predicted that it will deliver positive adjusted core profit of about €225 million in 2023.
‘Our improved profitability and strong capital position strengthen our business for further growth and underpin our ability to both deliver on our adjusted EBITDA targets and invest in food and non-food adjacencies,’ said chief executive Jitse Groen.
GTV growth has been anaemic throughout the year and guidance dropped first from ‘mid-teens’ to ‘mid-single digit’ to latterly, at the Q3 update, to ‘low-single digits.’ Orders slipped in all four of Just Eat Takeaway’s operating regions on an annual basis, reflecting weakness in demand from consumers dealing with a recent spike in inflation.
WAGING WAR ON TOO MANY FRONTS
‘We think the group’s ability to clean up its portfolio in 2023 and develop its strategy towards investing in growth in Northern Europe, as opposed to fighting losing battles on several fronts against several competitors, will be key,’ said analysts at Numis.
Most important on the agenda is exiting Grubhub, the US business bought for $7.3 billion in 2021, although management admits that the strained trading backcloth is making that process difficult. Analysts have previously speculated that Just Eat Takeaway will be lucky to get €1 billion for the platform.
Streamlining the business is already high on Just Eat Takeaway’s priority list. It has shown its hand with the sale of iFood, for which it has already banked an initial €1.5 billion pay-out, important since that cash will do wonders for lightening worries about a near-term cash crunch.
Full year 2022 results are pencilled in for 1 March 2023.
