The company discontinued its delivery service under the Foodora brand in Germany after only a short time.
(Photo: Fabrizio Bensch)
Dusseldorf Restaurant delivery service Delivery Hero has confirmed its forecasts and is clearly on course to turn a profit for the first time in the company’s history. According to preliminary figures, sales processed via the platform increased by 31 percent to 10.1 billion euros in the first quarter of 2022.
Delivery Hero’s goal has always been to create a sustainable, profitable company, emphasized founder and CEO Niklas Östberg when the figures were presented on Thursday. “We never lost sight of this goal,” said Östberg. “We are pleased to confirm that we are on a clear path to profitability and delivering on our promises to shareholders and our overall delivery ecosystem.”
When the figures for the fourth quarter were presented in February, Delivery Hero had clearly disappointed investors’ expectations. The result was an unprecedented drop in prices of 30 percent. Since then, any news about the group’s financial situation on the stock exchange has been observed very carefully.
Delivery Hero stock starts positive by numbers
Investors’ joy at the significant growth quickly evaporated on Monday. The shares of the food delivery service fell by up to 6.8 percent to 27.88 euros at the end of the Dax after they had increased by nine percent in an initial reaction to the quarterly figures.
Top jobs of the day
Find the best jobs now and
be notified by email.
In February, the share had already collapsed by more than 30 percent because the losses were higher than expected on the market, and the outlook had also disappointed the analysts. As a result, the price slipped further. Analysts had primarily expressed concerns about the financing. But the announcement of new debt financing at the beginning of April was only able to slow down the share’s downward trend for a short time.
The analysts had reacted to the month-long price slide and cut their price target for the Dax group by 45 percent from an average of 160 euros to 88 euros. But that is still well above the current rate.
With the figures for the first quarter, the company wants to show that it is on the right track and regain confidence in the stock market. The company emphasized in the announcement that its own sales, which mainly come from the commissions from the restaurants, increased by 52 percent to 2.1 billion euros. The growth is faster than other delivery platforms, emphasized Delivery Hero.
However, the company is still a long way from a profitable business. How high the loss was in the first quarter was not communicated. However, the company reiterated its forecasts that it will also end the full year in the red.
Investments in micro-warehouses fall in the first quarter
Delivery Hero assumes that it will make an operating loss of one to 1.2 percent in relation to sales. For the fourth quarter, however, an adjusted operating profit (Ebitda) of up to 100 million euros is already in prospect.
The main reason for the losses is no longer the core business, the delivery of food from restaurants. But Delivery Hero is building a new line of business, the fast delivery of groceries and daily necessities, which requires significant investments. This segment alone, called “Integrated Verticals”, is expected to make an operating loss of 525 million euros this year.
For this segment, Delivery Hero is building a network of small warehouses, so-called Dmarts, from which customers can be supplied in less than an hour. However, investments in this infrastructure are now declining. While 213 new Dmarts were opened in the fourth quarter, there were only 48 in the first quarter of 2022.
CFO Emmanuel Thomassin is therefore convinced that he will soon be able to collect the income from these investments. “Our team at Delivery Hero delivered solid results in the first quarter of 2022 and we are on track to deliver on our financial promises,” he said.
More: Delivery Hero ensures a price jump with a loan in the billions and an optimistic outlook