April 28, 2020 / 5:34 AM / a month ago

Delivery Hero sales leap during lockdowns

BERLIN (Reuters) - German online takeaway food company Delivery Hero (DHER.DE) reported a near doubling in first-quarter orders and revenue on Tuesday and predicted that the rise of ordering meals and groceries from home would persist after the coronavirus crisis.

FILE PHOTO: The Delivery Hero headquarters is pictured in Berlin, Germany, June 2, 2017. The Berlin-based company Delivery Hero, one of Europe's largest internet start-ups. REUTERS/Fabrizio Bensch

The Berlin-based company, which runs platforms for food delivery in 44 countries, said sales rose 92% to 515 million euros ($557 million). Though it suffered an initial negative effect from the coronavirus outbreak, the company said it has added 10% more new customers since the start of March.

It expects the pandemic will have a long-term impact on food ordering habits, noting that it has attracted more older customers who might not have ordered from home before, and is also upbeat about the prospects for delivering groceries.

“Delivery Hero is evidently having a ‘good crisis’,” said Jefferies analysts Giles Thorne and Sebastian Patulea.

The company’s shares were up 6.6% at 0902 GMT.

Shares in rival Just Eat Takeaway (TKWY.AS) jumped earlier this month after it reported that orders had recovered strongly from a dip in March when lockdowns were first imposed.

Delivery Hero saw a 26% rise in orders and a tripling of new customers in March for its ultra-fast delivery of groceries and pharmaceuticals from its 100 local warehouses in nine countries, mostly in the Middle East, Asia and Latin America.

The company aims to expand the service to have 400 warehouses by end of the year, with the business growing to a high single-digit percentage of sales by the end of the year, Chief Executive Niklas Ostberg told Reuters in an interview.

“We are just at the beginning of this... We believe we can grow this to the billions (of euros) or tens of billions over the next five to 10 years,” he said.

Delivery Hero works with more than 500,000 restaurants in Europe, the Middle East, Latin America and Asia. It added 50,000 new restaurants to its platform in the last three weeks of March, as well as 1,500 grocery stores and pharmacies.

The firm confirmed its outlook for 2020 revenue of between 2.4 billion and 2.6 billion euros, saying it would be able to absorb higher costs due to the pandemic, particularly in the Middle East, where strict curfews have been imposed.

Other costs have included the launch of a support fund for delivery drivers, the distribution of face masks and sanitisers, additional marketing and free delivery for local restaurants, Ostberg told journalists.

“We can absorb those costs by slightly better performance during the rest of the year,” he said.

The company also confirmed its outlook for an adjusted core profit margin of between negative 14% and negative 18% and for Europe to remain at breakeven during 2020.

Despite some restaurants switching to online delivery, Ostberg warned that many might not survive the pandemic, with those in the Middle East particularly hard hit by curfews.

“There will be restaurant fallout from this crisis,” he said.

Reporting by Emma Thomasson; Editing by Michelle Martin and David Goodman and Kirsten Donovan

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