Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Just Eat Takeaway has declared a €1.5bn impairment charge from past acquisitions as the online food delivery group bore the cost of buying rivals in its push to become the biggest in the sector in Europe.
The charge, mainly related to goodwill and other intangible assets from equity-funded purchases, weighed on the company’s full-year earnings, which came in at a net loss of €1.85bn, it said on Wednesday. Still, that was an improvement on a €5.7bn loss in the previous year.
Gross transaction value, a measure of how much customers spend on the platform, slid 6 per cent last year to €26.4bn, compared with a year earlier, declining 14 per cent in North America.
Food delivery groups, which boomed during the pandemic, have struggled to return to stable profitability as customers coping with a cost of living crisis and a rise in inflation in Europe and North America have reined in their spending.
“In some countries we were just too large for the size of the business after the pandemic,” said chief executive Jitse Groen, adding that the company had to take some “painful measures”.
“It took us a bit of time to reduce the costs, and we did, but that’s not our usual way of operating,” added Groen. “Our usual way of operating is by growing.”
The company’s adjusted earnings before interest, taxes, depreciation and amortisation rose ahead of guidance to €324mn last year, from €19mn in 2022, supported in part by cost-cutting measures. That figure will increase to €450mn in 2024, the company said.
Just Eat Takeaway laid off 1,700 delivery couriers across the UK last year, opting to rely entirely on gig workers for takeaway deliveries. The company had previously hired its UK delivery couriers, which it still does in continental Europe.
The group said it was still exploring a full or partial sale of Grubhub, as declining customer orders in the US continued to hit revenues.
“The biggest part of [the impairment charge] is from the US,” said William Woods, analyst at Bernstein. “The business there continues to be pretty weak.”
The group last year had written down nearly €5bn on multibillion-euro acquisitions that included the acquisition of US subsidiary Grubhub and Just Eat’s merger with Amsterdam-headquartered Takeaway in 2020.
The company’s London-listed shares dropped about 6 per cent on Wednesday.
It has said it aims to increase its user base and boost order frequency by expanding the range of restaurants it offers, as well as developing its capacity to deliver groceries and other consumer goods, from flowers to children’s toys.
Read the full article here