Just Eat shares plunge as £76m loss leaves sour taste
6 March 2018, 08:31
Shares in Just Eat have plunged after it slumped into the red thanks to a £180m hit from its Australia and New Zealand operations and warned of higher investment across the group.
The fast-expanding takeaway delivery platform reported a £76m loss for 2017, compared to a £91m profit the year before.
It also said it would ramp up spending in 2018 in the face of intensifying competition, resulting in an earnings outlook lower than markets have been forecasting.
Shares opened 14% lower on Tuesday. They partially recovered later but were still 12.6% down by the close.
Chief executive Peter Plumb hailed the wider success of the group's performance, saying it enjoyed a record year with 21.5 million customers ordering 172 million takeaways around the world.
In the UK, it saw its highest single day of orders in December on the night of the X Factor final, when more than 500,000 were processed.
Group revenues rose 45% to £546m, while Just Eat said that its underlying measure of earnings was up 42% to £164m.
But it added that while it had enjoyed a strong performance in 2017, the market was evolving with competition "intensifying in certain markets", including Australia and New Zealand, and customers expecting an "ever-better experience".
The company said it would make "considered investments to position the business for the future" in addition to already-planned spending.
It now expects underlying earnings of £165m-£185m for 2018, below market expectations of £226m.
In Australia, where Just Eat bought the Menulog business in 2015, it has been consolidating its range of brands and plans further investment to adapt to the "highly competitive" market.
Just Eat said the "rapid evolution…and the transformation under way in our business" would result in it writing down the "goodwill" value of the 2015 deal by £180m.
Founded in Denmark in 2001, Just Eat has expanded rapidly, moving in to territories across the globe from Brazil to Switzerland and gobbling up rivals.
Late last year it was promoted to the FTSE 100 Index of the highest value UK-listed companies.
In the UK, Just Eat's biggest market, 2017 revenues rose 28% to £304m while orders rose 195 to 105 million, helped by new tie-ups with Burger King and KFC.
The delivery platform recently faced criticism after it imposed a new 50p service charge on its orders, at the same time as it removed a 50p fee for debit and credit card charges to comply with a change in the law.
Commenting on the latest results, Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "There is nothing in these numbers to suggest that customers remain anything other than wildly enthusiastic for the group's services.
"But the market's initial reaction… is one of shock and concern that the move may in fact represent an admission that competition is intensifying for Just Eat."
(c) Sky News 2018: Just Eat shares plunge as £76m loss leaves sour taste