Food delivery firm Deliveroo on Thursday said 2021 was a year of strong growth and strategic progress, which it believes will lead to long-term profitability.
For 2021, revenue was £1.82 billion, up 57% from £1.16 billion in 2020, but Deliveroo’s pretax loss widened to £298.2 million from £212.6 million. Deliveroo said delivery orders totalled 300.6 million last year, up 73% from 173.7 million orders in 2020, and gross transaction value was £6.63 billion, up 67% from £3.98 billion in 2020.
Looking ahead, Deliveroo guides for 15% to 25% growth in GTV at constant currency in 2022, with a higher growth rate in the second half than in first half, due to a stronger comparative for the first half. It forecasts 2022 adjusted earnings before interest, tax, depreciation and amortisation of negative 1.5% to 1.8% of GTV versus negative 2.0% in all of 2021 and negative 3.2% in second half of last year.
Deliveroo expects to reach adjusted Ebitda breakeven at some point in the second half of 2023 or first half of 2024.
Chief Executive Officer Will Shu said: ‘This year it is clear that all three sides of our marketplace in Europe will face headwinds due to inflationary pressures, the removal of economic stimulus and the broader geopolitical and economic impacts of the conflict in Ukraine. We will continue to monitor developments closely. Our 2022 guidance reflects our caution on these factors, but we are confident in our ability to adapt financially to a rapidly changing macroeconomic environment.’
Commenting on the results, Dan Thomas, a senior analyst at Third Bridge, said: ‘Analysts want to see a clear pathway to sustainable profitability given today’s tougher funding environment.’
He added: ‘In 2022 competition will remain very high in the traditional food and grocery delivery markets and this makes it unlikely that ROO will be able to reduce its high marketing expenditure in the near term...There is a big question mark over how quickly players like Deliveroo can reduce their marketing expenditure without ceding market share or volumes. Smaller volumes would reverse gains on the network efficiency side.’
Deliveroo shares were up 7.2% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 7,321.41
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Hang Seng: up 6.7% at 21,433.77
Nikkei 225: closed up 3.5% at 26,652.89
S&P/ASX 200: closed up 1.1% at 7,250.80
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DJIA: closed up 518.76 points, 1.6%, at 34,063.10
S&P 500: closed up 2.2% at 4,357.86
Nasdaq Composite: closed up 3.8% at 13,436.55
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EUR: up at $1.1034 ($1.1005)
GBP: up at $1.3165 ($1.3098)
USD: up at JP¥118.77 (JP¥118.50)
Gold: up at $1,934.88 per ounce ($1,908.85)
Oil (Brent): up at $100.65 a barrel ($99.33)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday’s key economic events still to come
1100 CET EU consumer price index
1200 GMT UK Bank of England interest rate decision
0830 EDT US housing starts
0830 EDT US jobless claims
0915 EDT US industrial production
1030 EDT US EIA weekly natural gas storage report
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Ukraine accused Russia of bombing a theatre that was sheltering more than 1,000 civilians in the city of Mariupol, after US President Joe Biden branded Vladimir Putin a ‘war criminal’. The latest assaults on civilians across Ukraine came as President Volodymyr Zelensky made a searing appeal for help to the US, which responded by pledging $1 billion in new weapons to fight Russia’s invading army. Officials across Ukraine are struggling to count the civilian dead – with authorities saying 103 children have been killed since the invasion began – who have been targeted in homes, hospitals, ambulances and food queues. In the port city of Mariupol – where more than 2,000 people have died so far – a Russian bomb hit the Drama Theatre, which city council officials said had been housing over 1,000 people.
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BROKER RATING CHANGES
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JPMorgan raises Diageo to ’overweight’ (neutral) - price target 4,350 pence
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Berenberg starts Convatec with ’buy’ - price target 250 pence
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COMPANIES - FTSE 100
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Ocado Retail, the joint venture between Ocado Group and Marks & Spencer, said revenue declined by 5.7% in the 13 weeks that ended February 27 from a year before but was up 32% from 2020. Retail revenue fell to £564.7 million from £599.1 million a year before. Average orders per week rose by 12% to 367,500 from 329,500, but average basket size shrank by 15% to £124, ‘as customer behaviours return towards pre-Covid levels’. Looking ahead, Ocado Retail expects revenue growth of 10% for the full-year, though this should in the high-teens toward the end of the year, it said. Meanwhile, profit margins will be hurt by food and energy price inflation.
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COMPANIES - FTSE 250
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Cineworld said it delivered a resilient performance in challenging market conditions and that it was in a good position to benefit from the expected industry recovery. The world’s second largest cinema chain, behind US-based AMC, noted its results for 2021 include a period of temporary closures from January to April-May due to Covid-19 restrictions and a limited film slate. Revenue more than doubled to $1.80 billion in 2021 from $852.3 million in 2020, and the company’s pretax loss narrowed sharply to $708.3 million from 2020’s massive $3.0 billion. Turning to returns, Cineworld said dividends remain suspended as it continues to prioritise liquidity preservation during its recovery from the pandemic. Looking ahead, Cineworld pointed to a gradual recovery of admissions and demand since re-opening, supported by strong retail sales and premium formats. January and February of this year were hurt by Omicron and the lack of major movie releases, but Cineworld anticipates strong trading starting in March, with the new Batman release and supported by a strong and full film slate in 2022.
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National Express outlined its case for its previously agreed all-share merger with public transport peer Stagecoach saying its offer presents a superior value creation opportunity compared to that of DWS, which Stagecoach now support. National Express said its all-share offer for Stagecoach is worth 125p to 170p per share compared to 105p in cash from DWS. The FTSE 250 firm said the DWS cash offer ‘materially undervalues Stagecoach’ and asked Stagecoach shareholders to take no action on the DWS cash offer. National Express made no change to its own offer, saying it ‘will remain disciplined in its assessment of its options going forward’.
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COMPANIES - MAIN MARKET AND AIM
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Fellow bus and train operator Go-Ahead said it has been fined £23.5 million by the UK Department for Transport over contraventions of the franchise agreement for London & Southeastern Railway. However, this is less than the £30.0 million provision that it made for the expected penalty in its financial 2021 accounts, and it will be paid from LSER’s restricted cash balance. The penalty was for Go-Ahead failing to notify the DfT of overpayments or monies due to the UK government.
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Thursday’s shareholder meetings
BATM Advanced Communications Ltd - GM re share buyback
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