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Global Economy

Delivery Hero's annual figures are irritating

The shares of the DAX member Delivery Hero temporarily collapsed by almost a third in electronic trading on the Frankfurt Stock Exchange. In the previous daily low, the paper was only 46.02 euros and thus 31 percent lower than the previous day. That was the stock's highest one-day loss since its IPO in mid-2017.

Focus on Asian business

Last year, the gross merchandise value (GMV), i.e. the value of the food delivered, rose by 62 percent to a good 35 billion euros compared to the previous year. Delivery Hero's sales, i.e. primarily the commissions for referring customers to the restaurants, rose group-wide by 89 percent to 6.6 billion euros, which was within the scope of the company's own forecast. The Berlin-based company now does around two-thirds of its business with orders in Asia. The Berlin-based company no longer has any operations in Germany after selling it to competitor Just Eat Takeaway some time ago. Only one research center remains in Berlin to try out innovations.

Adjusted for special effects, the loss before interest, taxes, depreciation and amortization (Ebitda) rose by almost a third to 781 million euros in 2021. At minus 2.2 percent, the operating return on the gross value of goods (Ebitda margin) was worse than previously forecast.

New business areas in focus

Meanwhile, Delivery Hero not only wants to provide its customers with restaurant food, but also with groceries and other supermarket products. However, the company also has to defend itself against strong competition such as Flink, Getir and Gorillas. To get a foothold in this market, Delivery Hero took a stake in Gorillas last year.

CFO Emmanuel Thomassin justified the worse-than-expected Ebitda with the necessary investments in South Korea and Turkey to keep competitors such as Uber Eats and Coupang in check, as well as costs for the accelerated expansion of the company's own warehouse network. "Growth has top priority," Thomassin made clear.

Optimistic view of the future

Delivery Hero's sales are expected to increase to between EUR 9.5 and 10.5 billion in the current year. That would correspond to an increase of at least 44 percent. The company forecasts the gross value of goods to be between 44 and 45 billion euros in 2022 and intends to increase this value to at least 200 billion euros by 2030.

In the current year, the Ebitda margin should initially improve to between minus 1.0 and 1.2 percent. By 2030, it should then be at plus five to eight percent. "What's the point of a good 2030 outlook if it's not satisfactory for 2022," asked a trader. One or the other would probably feel fooled.

"Darwinian Capitalism"

"We are seeing the effects of a kind of Darwinian capitalism here," said Erik Maier from the Leipzig Graduate School of Management in the tagesschau24 program "Update Economy". It is about a cut-throat competition that costs a lot of money. It is relatively easy to enter the industry, all you really need is a few servers and drivers. In times of competition, the customers benefit, but in the long term the goal of the providers is to achieve a monopoly-like market position.

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