Just Eat profits plummet on investment in delivery

Just Eat has reported a slump in profits after investing heavily in rolling out its own delivery services and its Brazilian joint venture, as it prepares for a major merger with a Dutch rival.

Profit before tax dropped 98% to just £800,000 for the six months to June 30.

The company said the decline was down to its planned investments in delivery and Brazilian business iFood.

This came as the takeaway operator’s orders jumped 21% to 123.8 million.

Revenue outstripped the pace of order growth, climbing 30% to £464.5 million as an increasing proportion of deliveries were fulfilled by Just Eat’s own fleet.

The company has invested heavily in its own delivery operations to compete with rivals such as Deliveroo and Uber Eats, with more than 50% of restaurants on the platform in both the UK and Australia now covered by the service.

It also put £73.2 million of cash into iFood, of which it owns 33%. The business is around 17 times the size of the nearest competitor in Brazil, but Just Eat has come under pressure from activist investor Cat Rock to offload its stake.

Interim chief executive Peter Duffy said: “We’ve been working at pace and made good progress in the first half of the year to become the preferred food delivery app for our customers, with a broader choice of restaurants, a better user experience and a more personalised and impactful approach to communication.”

Underlying earnings excluding Mexican operations were down 16% to £72.4 million.

Full year revenue is still expected to be between £1 billion and £1.1 billion, while earnings are on track to be £185 million to £205 million, excluding Mexico and Brazil.

The results come after it was revealed over the weekend that the company has agreed terms for a £9 billion with Amsterdam-based Takeaway.com.

The firm will buy Just Eat at 731p a share, valuing the British business at £5 billion.

Just Eat’s board has recommended the deal to shareholders, though analysts said on Monday it was possible there could be a rival bid from Delivery Hero.