Just Eat continues fight for market share with investment

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Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) reckons it reached the peak of its absolute losses in the first half of 2021 even though it continues to invest heavily in the fight for market share.


The food delivery giant said earnings will be driven by the growth and increased scale of the business, product and technology improvements and more efficiency.


READ: Just Eat Takeaway shares on the menu as end of downgrade cycle looms


In the first six months of 2021, COVID-19 related commission fee caps and restaurant support initiatives were EUR142mln and, while some of them have fallen away, others have been prolonged due to restrictions on the hospitality sector.


The FTSE 100 group said the fee caps “are unlawful” and impact the revenue of partner restaurants caused by higher consumer prices, so it will join the industry to oppose any extensions.


The UK has been the market with the fastest growth so far, adding a record 58mln orders to 135mln orders in the six months to June, about double the absolute growth pace of its competitors.


The average monthly order frequency in the UK reached 3.2 times, up from 2.5 times a year ago.


Delivery orders in Germany grew by 110%, while in the US Grubhub was up 27% to 134mln orders.


Just Eat reiterated guidance for the full year of 45% total order growth, with gross transaction value (GTV) of EUR28bn-EUR30bn and adjusted underlying losses of 1-1.5% of GTV.


In the six months to 30 June, revenue surged 52% to EUR2.6bn with GTV of EUR14.1bn for 546mln orders. Adjusted losses were EUR190mln from earnings of EUR205mln the year before.


“Demand seems little affected by the reopening of dine-in restaurants at present. The investment in delivery and extensive brand marketing is a long-term market share play but will serve to crimp margins, especially if delivery volumes cannibalise marketplace orders which are significantly more profitable overall,” commented analyst Dan Thomas at Third Bridge.


“Competition in Germany, Just Eat Takeaway’s second-highest margin region in H2, will also be a concern. Where Takeaway’s Lieferando brand had previously dominated the market, Delivery Hero (ETR:DHER, OTCQX:DLVHF)’s re-entry will reignite the fight for market share in the country.”


Shares rose 4% to 6,353p at lunchtime.


–Adds analyst comment, shares–

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