Just Eat Rises as it Flags Possible GrubHub Sale; Profitability Still Seen Far Off
2022.04.20 12:10
By Geoffrey Smith
Investing.com — Just Eat Takeaway (AS:TKWY) stock rose in Europe on Wednesday morning after the company said it was looking at selling Grubhub, the U.S. food delivery business that it bought less than a year ago for over $7 billion.
By 4:45 AM ET (0845 GMT), Just Eat (LON:JETJ) stock was up 2.1% in London and 2.2% in Amsterdam but it remains down more than 50% over the last four months, as rising interest rate expectations have undermined the assumptions of cheap capital costs underlying its valuation.
“Management is currently, together with its advisers, actively exploring the introduction of a strategic partner into and/or the partial or full sale of Grubhub,” the company said in a statement as it unveiled its latest quarterly earnings. It added that “there can be no certainty that any such strategic actions will be agreed or what the timing of such agreements will be.”
Just Eat has been losing ever-larger amounts of money as it invests heavily in expansion in both Europe and the U.S., in the face of intense competition from the likes of Deliveroo and Uber’s (NYSE:UBER) Uber Eats business. Net losses widened in each successive quarter last year from 59 million euros in the first quarter to 657 million in the fourth.
Things are unlikely to have improved much in the first quarter of 2022. The company said that total orders fell from year-earlier levels by 1%, admittedly against a comparison quarter in which all of its main markets experienced extraordinary demand due to Covid-19 lockdowns. Those factors have largely unwound since. All the same, gross transaction value rose only 4% in nominal terms and was flat from a year earlier when adjusted for the euro’s depreciation. The figures aren’t adjusted for inflation, which was running at between 7% and 8.5% in its main markets in the first quarter.
Just Eat said in its release that: “Management considers enhancing profitability as one of its highest priorities in 2022, with a clear focus on (i) increasing revenue per order, (ii) improving courier costs per order, and (iii) reducing overheads and operating expenses.”
However, it will still be a year at least until shareholders see any profits from the company. Just Eat said it doesn’t expect to be profitable even at the level of adjusted earnings before interest, taxes, depreciation and amortization until 2023.
