Just Eat Takeaway.com’s share price and mood were not lifted by the delivery of jam today or the promise that more would be delivered tomorrow or later this year.
Europe’s largest food delivery group has reported a massive jump in earnings before deductions, from €19million in 2022 to €324million. This is slightly above its previous estimates. It reached the “significant milestone” of being free-cashflow-positive in the second half.
The company also forecast a 40% increase in profits this year, and hinted at the possibility of a second share buyback after the €150 million one that ends in September. Jitse Groen said that he would carefully examine whether an additional buyback was possible. However, his failure confirm a program extended the recent decline of Just Eat’s shares. Stocks, which had fallen by more than a third in the last year, dropped by another 28p or 2.2% to close at £12.56.
Just Eat increased its forecast for 2024 underlying profit at €450 million due to an increase in the number of orders placed via apps, and also because it added grocery and retail items.
Groen, 45 years old, stated that the competitive environment was improving for the group in northern Europe, but added that “there are still plenty of irrational rivals”.
The company is expecting its gross transaction value (the total value of goods sold) to rise by 2 to 6 percent in the next year. This excludes North America where it’s trying to find buyers of some or all of its Grubhub businesses. Groen stated that it was “not a very easy M&A market” in America. Fee caps, which are limits in some states to what can be charged on deliveries, cost the company around $100 million per year.
Jitse Groen said that the American state’s curbs on delivery fees cost Just Eat Takeaway $100 million per year.
Just Eat’s UK and Ireland division saw its profits rise from €23 to €135 millions, largely due to an increase in efficiency of delivery and the simplification and streamlining of its operations. The company also switched from an employee model for delivery to a contract model.
Just Eat stated that an increase in margin from 0.4 to 2 percent of gross transaction value meant that UK and Ireland was “rapidly achieving a similar high [pre-tax] profit margin adjusted as northern Europe”.
The gross transaction value increased by 1 percent to €6.6 billion, despite a 6 per cent decline in orders. The company increased its number of partners by 1% to 699, 000, but the number active consumers dropped by 6% to 84,000,000. The average monthly order frequency was unchanged.
The total number of orders dropped by 9 percent to 891 millions, and the gross transaction value including North America fell by 6 percent, or 4 percentage points at constant currency rates to $26.4 billion.
Just Eat was formed four years ago by the merger of Just Eat with Takeaway.com (its Dutch competitor). It has its headquarters located in Amsterdam, and it operates in Germany, Canada and Australia as well as France, Spain, and Israel. In 2023, the company reported a net loss of €1.85bn after tax after recording a €1.06bn impairment on its American business.