(Bloomberg) -- Delivery Hero SE sought to reassure investors with an accelerated plan to reach profitability by next year driven by its Asia business despite a broader slowdown in the food delivery industry.
While growth has eased following a pandemic surge, the Berlin-based company said Tuesday it will generate positive adjusted earnings in fiscal year 2023. It also forecast the value of transactions on its platform will grow 7% this quarter from the second quarter.
Delivery Hero’s Asia segment already generated positive adjusted earnings in the second quarter, it said in an earnings statement. Shares rose in early trading in Frankfurt.
The company hasn’t set a timeline for generating free cash flow yet but an update may come soon, according to Chief Executive Officer Niklas Oestberg. “The path is pretty clear,” he said in an interview.
Last month, Delivery Hero cut its outlook for sales and orders for the year, joining others in the the industry that have slashed growth projections. However, the company also said it would buy back convertible bonds and that its margins would be better than expected.
Competitors such as Deliveroo Plc and Just Eat Takeaway.com NV previously announced plans to boost revenue and cut costs as orders decelerate after a period of rapid growth during lockdown restrictions.
- Delivery Hero confirmed previous guidance for 2022 that it will generate gross merchandise value of as much as 46.9 billion euros ($47.6 billion) and total segment revenue of as much as 10.4 billion euros.
- The company reiterated its forecast that its margin of adjusted earnings before interest, taxes, depreciation and amortization to gross merchandise value will be -1.5% to -1.6% this year.
- It said it sold its entire stake in Zomato Ltd., valued at $60 million, in July.
- Oestberg said in the interview that the accelerated path to profits will be acheived from steps such as offering fewer discounts, boosting efficiency and growing scale.
- He added that he’s seen little impact from rising inflation, although increased consumer prices have slightly dampened demand in Europe.
- Shares in Delivery Hero rose as much as 7.5% Tuesday in Frankfurt.
- Shares are down 45% year-to-date, compared to a 22% drop for an index of European technology companies.
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(Updates throughout with more info, CEO interview, shares)
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