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Just Eat Takeaway.com losses mushroom due to acquisition costs

Revenue from the Dutch and German businesses was up 79% to €415.9mln

Just Eat Takeaway.com NV -

Just Eat Takeaway.com NV (LON:JET) reported much-increased revenues but also mushrooming losses for 2019 from its Dutch and German business ahead of the merger with their UK peer.

Netherlands-based Takeaway.com completed the merger with UK-based Just Eat on 31 January 2020 and shares in the combined entity began trading on the FTSE 100 index on 3 February, though the UK Competition and Markets Authority has ordered the two businesses to be run independently and under separate management until it has concluded an investigation.

READ: Just Eat investors squeamish as CMA launches investigation into Takeaway.com merger

Reporting results for just the Takeaway.com side of the business, a post-tax loss for the period was revealed to have mushroomed to €115.5mln, compared with a €14mln loss a year earlier.

This was said to reflect the “significant” advisory, transaction and integration-related costs connected to the acquisition of German businesses Delivery Hero Germany and Foodora, and Just Eat, together with higher amortisation expenses on acquired intangible assets in Germany.

Chief executive Jitse Groen highlighted that it was the first time since its IPO that the company had ended the year with positive underlying profits (adjusted EBITDA), which swung to €12.3mln in 2019 from an EBITDA loss of €11.3mln in 2018, though he did not mention that it was much lower than the average analyst forecast of €33.5mln.

Groen said that achieving a positive EBITDA last year had been a key medium-term target in the company's IPO prospectus.

With revenue up 79% to €415.9mln - of which the core Netherlands business grew 23% and acquisitions added the rest - Groen pointed out that the group has “almost four-folded” revenue since 2016. 

Takeaway.com processed 159.2mln orders in 2019, up 70% on the year before, 

“We are very excited about the opportunities the combination makes possible and are looking forward to 2020,” Groen said.

However, the company said it would not provide an outlook “given the material impact of the Combination with Just Eat on our plans for 2020”.

JET shares, which started trading under the combined entity name at 7,350p and have since risen strongly, were down 0.6% to 8,205p on Thursday morning.

Analysts at UBS said gross profit of €305mln was below the consensus forecast of €320mln, with EBITDA well below forecasts due to investments in less mature markets, own delivery, as well as ramping up of IT staff.

The analysts noted that profit margins in the Netherlands were down 250 basis points between the first and second half of the year driven by own-delivery and central costs, while in Germany margins improved to 9% from -8%.

   --Adds share price and broker comment-- 

Quick facts: Just Eat Takeaway.com NV

Price: 7165 GBX

LSE:JET
Market: LSE
Market Cap: £4.38 billion
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