19th Apr 2023 13:38
(Alliance News) - Shares in Just Eat Takeaway.com NV were lower Wednesday afternoon, giving up a bounce at the market open on its announcement of a stock buyback and and raised annual guidance.
Just Eat Takeaway shares were down 2.3% to 1,403.00 pence in London, contributing to a 35% decline over the past 12 months.
The Amsterdam-based food delivery platform on Wednesday said it will repurchase up to EUR150 million worth of its own stock in order to improve earnings per share, and it said its effort to improve overall profitability is "running ahead of plan".
The buyback programme will repurchase, mostly for cancellation, up to 4.2% of its existing shares, based on its closing price on Tuesday in Amsterdam of EUR16.26. Just Eat Takeaway has a market capitalisation of EUR3.45 billion. The stock was down 2.3% to EUR15.89 in Amsterdam on Wednesday.
The buyback programme, which will be conducted by an undisclosed third party, begins on Wednesday and runs until no later than December.
Just Eat said total orders in the first quarter of 2023 were down 14% from a year before to 227.8 million from 263.5 million, while gross transaction value fell by 7.7% to EUR6.67 billion from EUR7.22 billion.
"While the year-on-year GTV decline in Q1 2023 is significant, the comparison is with the quarter with the second highest GTV of the pandemic," commented Chief Executive Officer Jitse Groen.
The decline in gross transaction value was led by the Southern Europe & ANZ region, down 18%, and North America, down 11%. The UK & Ireland region was down 6.3%, while Northern Europe was flat when excluding discontinued operations in Norway, Portugal and Romania.
Looking ahead, Just Eat Takeaway guided for GTV in 2023 to be between down 4% and up 2%, with growth skewed to the end of the year due to comparison with the pandemic boost early last year.
The company said it expects positive adjusted earnings before interest, tax, depreciation and amortisation of EUR275 million in 2023, raised from previous guidance of EUR225 million. It expects free cash flow to turn positive in mid-2024.
"The company continues to make good progress on delivery-led operational improvements and is now ahead of plan," Groen said.
Analysts welcomed the company's trading update and share buyback.
"What's positive is the material upgrade to FY23 Ebitda guidance and the first-time explicit guidance for [free cash flow] break-even (mid-2024), both being critical to attracting capital back to the name," commented Jefferies.
Added Davy Research: "The online foodies perhaps personified the end of the 'growth' love affair over 2022. A profoundly negative share price performance and a meaningful pivot across all business models points towards faster and better [adjusted] Ebitda profitability. At TKWY, it may also be that there is something of a perception challenge as well, the equity is down almost 40% year-to-date, with the other foodies treading water."
Davy noted that beyond the overall post-pandemic challenges for the food delivery sector - affecting competitors such as Deliveroo PLC and Uber Eats as well - Just Eat Takeaway faces some company-specific questions, such as what to do with its Grubhub acquisition in the US.
Just Eat Takeaway also is facing increased competition in the UK, where last month the company announced plans to cut around 1,700 delivery driver jobs and 170 head office roles.
"Consumer habits over the past year were impacted by more than just the end of the pandemic," commented Neil Shah at research house Edison. "Demand for fast food has swiftly transitioned into demand for cheap food – the cost-of-living crisis deterring consumers from splashing out on deliveries – and the downturn in Just Eat's GTV certainly reflects this trend."
By Tom Waite, Alliance News editor
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