The Dax group is shifting the financial burden and is aiming for black figures.
(Photo: dpa)
Berlin The food delivery service Delivery Hero wants to make it into the black with new loans. On Monday, CEO Niklas Östberg described the financing transaction with a total volume of 1.4 billion euros as an “important milestone” in becoming profitable at group level. The internationally active Berlin company is now aiming for this for the coming year.
Due to extensive investments – including the expensive expansion of the business with deliveries of supermarket articles and the takeover of Glovo in Spain – Delivery Hero has so far been in the red. In 2020 alone, an adjusted operating loss of 568 million euros was incurred. For financing, Delivery Hero has issued convertible bonds, the tranches of which are now gradually maturing and are to be serviced with the help of the new loans.
The new security was well received on the stock market. The paper listed in the leading index Dax jumped 11.5 percent. Most recently, Delivery Hero had come under a lot of pressure on the stock exchange. In February, the stock fell more than 30 percent as investors realized that losses were bigger than expected and the company was cautious about looking ahead.
Specifically, Delivery Hero’s financing transaction consists of two lines of credit totaling almost EUR 1.05 billion with a term of 5.25 years and a revolving syndicated loan of EUR 375 million with a preliminary term of three years.
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“We have built a solid and diversified capital structure that provides us with financial flexibility and ample liquidity buffers to deliver on our strategic priorities,” said Östberg.
Delivery Hero specifies goals
Delivery Hero is growing rapidly because people in the corona crisis have got used to ordering their meals online and having them delivered to their homes. According to the company, sales increased by 53 percent in the first two months of 2022. However, Delivery Hero not only wants to provide its customers with restaurant food, but also with groceries and other supermarket items. That costs a lot, and investors now want to know how and when the business will ultimately become profitable.
According to earlier reports, the food delivery business is expected to break even on an adjusted operating profit (Ebitda) basis this year and the Ebitda margin measured on the gross value of goods is expected to improve to minus 1.0 to plus 1.2 percent initially. The food delivery business is said to continue to be in the red with an adjusted Ebitda of up to minus 525 million euros.
In order to curb the losses somewhat, Delivery Hero quickly ended the short and expensive trip to the German market, wants to sell the Japan business and turn the Rappi stake into money.
More: The 273 billion euro risk: High debts are becoming a problem for corporations.