18th Jan 2023 11:53
(Alliance News) - Just when Just Eat Takeaway.com NV decided to focus on achieving profit, following a pandemic-driven growth boom, the food delivery market was hit by food cost inflation and consumer belt-tightening.
Despite those problems, figures released on Wednesday showed Just Eat made considerable progress last year. However, sustained profit will require more than just cost cutting, analysts said.
Just Eat swung to positive earnings on an adjusted basis in the second half of last year and for 2022 as a whole, as the online food delivery marketplace focuses on profitability.
The former FTSE 100 stock was up 8.0% at 2,299.50 pence in London on Wednesday morning. It remains down 42% over the past year.
Just East said it swung to positive adjusted earnings before interest, tax, depreciation and amortisation of EUR150 million in the second half of 2022 from negative EUR134 million in the first half.
This means the food delivery app posted positive adjusted Ebitda of EUR16 million for all of 2022, swung from negative EUR350 million in 2021. Just Eat said the performance was driven by improved revenue per order, improved delivery costs per order, and lowered overheads.
Just Eat expects positive adjusted Ebitda of EUR225 million in 2023.
At the statutory level, Just Eat loses money, despite the boost from lockdowns during the Covid-19 pandemic. Its pretax loss in 2021 was EUR1.05 billion, widened from EUR147 million in 2020.
The improved earnings in 2022 come despite a 2.1% slip in gross transaction value in the fourth quarter, to EUR7.11 billion from EUR7.27 billion a year before. In all of 2022, GTV was flat at EUR28.22 billion versus EUR28.18 billion.
The number of orders fell by 12% to 239.8 million in the fourth quarter from 273.7 million a year before. They fell by 9.4% to 984.5 million in all of 2022 from 1.09 billion in 2021.
Just Eat said it continues to "actively explore" the partial or full sale of Grubhub but said there can be no certainty of an agreement. Just Eat bought the Chicago-based peer back in June 2021 for USD7.3 billion.
Along with its focus on cost, Just Eat said it plans to invest in "food and non-food adjacencies" in 2023 and said its "long-term objectives" remain unchanged.
"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 Officer Jitse Groen.
Sandeep Sharma, an analyst at research firm Third Bridge, commented: "The initial tailwind the industry felt at the end-of-the-lockdown has now been offset by food inflation and the UK's cost of living crisis."
Sharma added: "Just Eat Takeaway's lower-price bracket perception should offer some protection compared to more premium players like Deliveroo. Our experts tell us that there have been no material shifts in aggregator commissions.
"The equity story and path-to-profitability for the sector has evolved to include the integration of additional services such as quick commerce, with Delivery Hero [SE] and Deliveroo [PLC] making strong organic moves in this space. Meanwhile JET went for partnerships with Getir and [J Sainsbury PLC]. Such big partnerships and their successful execution will be key to attain and sustain profitability."
Jefferies has a 'buy' rating and EUR38 price target on Just Eat shares, more than 60% above its current market price. The investment bank said a research note that it had issued last month made the case for "evidence of life" in the online food delivery sector.
"In JET's 4Q22 trading update, that case has been validated, with GTV in the teeth of the cost of living crisis not evaporating and Ebitda significantly out-performing expectations," Jefferies said.
"The 2023 Ebitda guidance is especially eye-catching: not only are the consensus upgrades large, the guide neither compromises on growth investments nor is divorced from macro pressures."
By Tom Waite, Alliance News editor
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