Just Eat Takeaway has taken a near €5bn writedown on the multibillion euro mergers that created Europe’s biggest food delivery group, revealing the cost of buying rivals at the top of the sector’s lockdown-driven boom.
The online food delivery company on Wednesday reported a €5.7bn loss in its full-year earnings for 2022, up from €1bn a year ago, largely due to a €4.6bn impairment charge on past equity-funded acquisitions.
This included writedowns for the $7.3bn acquisition of US subsidiary Grubhub and Just Eat’s merger with Takeaway in 2020, which the company said were driven by increasing interest rates and other macroeconomic factors.
It also recorded a €275mn loss from the sale of its stake in Brazilian food delivery app business iFood in August 2022.
JET’s shares slipped as much as 10 per cent on Wednesday morning after the group made no change to its guidance for 2023, before recovering to trade up 2 per cent.
The food delivery business recorded adjusted earnings of €19mn in 2022, compared with minus €350mn in 2021, in line with a trading update in January. It expects adjusted earnings to rise to €225mn in 2023.
The impairment losses come as JET is struggling to find a buyer for Grubhub, which it bought in June 2020 as part of a push into the US amid a lockdown-driven food delivery boom.
JET bowed to pressure from activist investors to explore a sale in April 2022, after the Amsterdam-listed business’ valuation fell below the total it paid for Grubhub. The entire group is now valued at €4.2bn.
“We have been very close to a sale and the problem was the changing financial environment at the beginning of last year,” chief executive Jitse Groen told the Financial Times.
“If you’re in a process with a buyer and the buyer loses the financial strength to be able to complete the transaction, then you’re kind of stuck,” he added.
Groen said that buyers were waiting for fee caps on delivery companies to be lifted in US cities including New York, San Francisco and Seattle to ascertain the future profitability of the company.
These were imposed during the pandemic to limit the amount companies could charge restaurants for deliveries, hitting companies like Grubhub, UberEats and DoorDash.
“There’s very little M&A and there’s uncertainty about the future profitability of Grubhub because of fee caps. If they are lifted, there’s a new situation to look at,” he added.
Gross transaction value, a measure of how much customers spend on JET’s platform, was flat compared with 2021 at €28.2bn. Order numbers fell by 9 per cent from 1.1bn to 984mn in 2022, but customers spent 3 per cent more on average per order.
Groen said customers were weathering cost of living pressures and the business was benefiting from rising restaurant prices, but that it would not raise delivery fees this year.
“Restaurants are increasing their prices because costs are going up,” Groen added. “[Customer] prices will go up but I don’t think it will be caused by us [raising fees]”.
