Deliveroo forecasts earnings growth after positive end to 2022
By Paul Sandle
LONDON (Reuters) - Deliveroo, the British meal delivery company that saw demand boom during the pandemic, said it would make up to 50 million pounds ($60 million) in core earnings this year as it focuses on profitability in a tougher consumer environment.
The 10-year old company for the second half of 2022 reported adjusted core earnings of 6.6 million pounds, rebounding from a 84.6 million pound loss a year earlier and a 51.6 million pound loss in the first half.
CEO Will Shu said Deliveroo had made "a lot of progress on its path to profitability" despite a challenging consumer environment, noting it had reached core earnings breakeven in the second half.
"This is obviously one of the milestones to becoming more profitable, but I think we're really proud of this because we reached it 12 to 18 months before we said we would, and then in '23 we expect to make continued progress," he said in an interview on Thursday.
Shu said the improvement was driven by optimising consumer fees, lower marketing spend and new revenue from advertising on its platform.
Deliveroo said in January that the number of orders dropped by 2% in the final quarter, although inflation had helped the total value increase 6% to 1.8 billion pounds.
Shu said it was "not the easiest time" for consumers, although sentiment "had improved slightly in the few weeks".
But the outlook remained volatile, he added.
Deliveroo said the first quarter of 2023 was expected to be broadly flat before improving, with gross transaction value for 2023 expected to grow by low to mid single digits.
Adjusted core earnings were expected to be in 20-50 million pounds, it said.
The group, which competes with Uber Eats and Just Eat Takeaway, said last month that it was cutting 9% of its workforce as order growth slowed.
Shares in Deliveroo were trading down 3% at 89 pence in early trade on Thursday. They hit a high of 397 pence 16 months ago.
($1 = 0.8280 pounds)
(Reporting by Paul Sandle; Editing by Kate Holton)