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Grab Cuts Full-Year Outlook on Worsening Virus Outbreak

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(Bloomberg) -- Grab Holdings Inc., Southeast Asia’s ride-hailing and delivery giant, cut projections for 2021 as the region is battling one of the world’s worst Covid-19 outbreaks due to the fast-spreading delta variant.

The Singapore-based company, which is set to go public in the U.S. through a deal with a blank-check company, expects full-year adjusted net sales of $2.1 billion to $2.2 billion, according to a statement Tuesday. That compares with $2.3 billion it forecast in an investor presentation in April. Grab also expects full-year gross merchandise value of $15 billion to $15.5 billion, compared with an earlier projection of $16.7 billion.

“The delta variant has unfortunately hit the region hard,” Chief Executive Anthony Tan said during the company’s earnings call on Tuesday. “Southeast Asia now has the world’s highest Covid mortality rate per capita and lockdown measures are still in place across major cities in the region.” In Vietnam, even food delivery services are being restricted, affecting Grab’s business, he said.

With infections rising as the more contagious delta variant of Covid spreads, many parts of Southeast Asia, home to 650 million people, have reimposed curbs on movement that hamper consumer-reliant economies. Lockdowns have devastated businesses and dealt a setback to the region’s middle class. In July, the Asian Development Bank downgraded its Southeast Asian growth forecast to 4% from 4.4%.

The Best And Worst Places to Be as Reopening, Variants Collide

During the second quarter, Grab’s net loss widened to $815 million from $718 million a year earlier. Revenue more than doubled to $180 million.

Grab reported its second quarterly financial results as it prepares to merge with Altimeter Growth Gorp., the special purpose acquisition company of Brad Gerstner’s Altimeter Capital Management. Grab has postponed the $40 billion deal -- one of the largest-ever mergers with a SPAC -- to the fourth quarter as it works on an audit of the past three years’ accounts.

Grab reiterated on Tuesday the merger is set to close this year. “We remain on track to becoming a publicly listed company and to complete our business merger with Altimeter Growth Corp. in the fourth quarter of this year,” Chief Financial Officer Peter Oey said during the call.

Key Insights

Adjusted net sales, a metric that doesn’t comply with the International Financial Reporting Standards, rose 92% to $550 million in the second quarter. Grab defines adjusted net sales as gross billings minus base incentives paid to drivers and merchants.Second-quarter GMV grew 62% to record $3.9 billion, led by mobility servicesDeliveries revenue was $45 million, up 92% from a year ago.Mobility revenue was $118 million, up 129% from a year ago.Financial services revenue was $6 million, up 156% from a year ago.

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Grab expects demand for mobility services to improve in the coming quarters as vaccination rates increase across the region.Grab started an online supermarket in the Philippines in September, offering consumers next-day delivery of groceries.Grab also plans to launch 10 new GrabKitchens in the second half of this year.

(Updates with executives’ comments starting in third paragraph.)

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