18th Oct 2023 13:19
(Alliance News) - A share buyback announcement took some sting out of an otherwise mixed update from food delivery firm Just Eat Takeaway.com NV on Wednesday.
The company lifted profit and free cash flow guidance, but lowered its top-line outlook.
The Amsterdam-based firm said it expects to achieve positive adjusted earnings before interest, tax, depreciation and amortisation of EUR310 million for the full year, raised from previous guidance of EUR275 million.
Adjusted Ebitda amounted to just EUR19 million in 2022, but this was swung from a loss of EUR350 million in 2021. In the first half of 2023, adjusted Ebitda was positive EUR143 million.
At the pretax level, Just Eat recorded a loss of EUR5.67 billion last year, widened from EUR1.04 billion in 2021, due by impairment losses of EUR4.6 billion for US operation Grubhub.
Also on Wednesday, Just Eat said it expects free cash flow, before changes in working capital, to be about break-even in the second half of this year and then turn positive thereafter. Previously, the company had guided for that measure to be positive only from mid-2024.
The company also announced the launch of a new share buyback worth EUR150 million. The repurchased shares will be used either for share-based compensation or will be cancelled to reduce capital, it said.
The buyback will start on Wednesday and be completed by September 30 of next year. Just Eat said that, based on its closing share price on Tuesday, the buyback will remove 5.7% of its shares from circulation, within the authorised limit of 10%.
In the third quarter of the year, gross transaction value was EUR6.47 billion, down 7% from EUR6.92 billion a year before and down 3% at constant currency. GTV was up 6% in Northern Europe and 5% in the UK & Ireland, but down 11% in both North America and in Southern Europe & ANZ, all at constant currency.
For the first nine months of the year, GTV was EUR19.69 billion, down 7% from EUR21.11 billion and down 5% at constant currency.
For all of 2023, Just Eat said it expects GTV to be down by 4% at constant exchange rates. Previously, its guidance was for GTV movement at reported exchange rates to be between negative 4% and positive 2%.
Analysts at UBS labelled it a "weak" third-quarter, but said the buyback announcement would help support the shares.
Just Eat Takeaway rose 1.0% to 1,049.00 pence each in London on Wednesday afternoon.
AJ Bell analyst Russ Mould was less than impressed with the update, however.
"A company as established as Just Eat Takeaway shouldn't be crossing its fingers hoping to be cash flow break-even. That's the sort of situation you would expect from an immature business that is starting to gain traction selling its products and services, not from a company that was once a member of the prestigious FTSE 100 index," Mould commented, noting the firm was once a FTSE 100 constituent, before being removed just over two years ago for essentially not being British enough.
"It feels like Just Eat is stuck in the mud – always declaring progress but always being held back by some part of its business. North America is the latest problem child for the group."
Chief Executive Jitse Groen said a recovery in North America "is on a slower trajectory".
Mould added: "Takeaway food can be incredibly expensive and with interest rates and inflation remaining stubbornly high, orders via platforms such as Just Eat are in decline. Its share price may have moved higher on the latest trading update yet that's merely down to upgraded earnings guidance. On a longer-term basis this stock has been as stale as a supermarket Danish pastry."
By Eric Cunha, Alliance News news editor
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