LONDON (Reuters) - Online takeaway service Just Eat Plc said it was confident it could see off the threat from newer rivals Uber Eats and Deliveroo, and expected its own delivery service to become profitable after investment peaks this year.
The company, which took its 500 millionth order in Britain last month on its platform of 30,000 independent takeaways, expanded its delivery service with investment of 50 million pounds in 2018.
Interim CEO Peter Duffy, who stepped into the role after Peter Plumb abruptly left in January, said the group’s Canadian business, which broke even in the last quarter, showed there was “a clear path to profitability” for home delivery.
Plumb increased investment in home delivery and technology, but activist investor Cat Rock criticised him for failing to set profit targets.
Duffy, who has also been opposed by Cat Rock, said he was not seeking the CEO post permanently. “I have decided I don’t want to be a candidate in that process,” he told reporters.
He said Just Eat’s profitable marketplace - its platform that allows customers to order from takeaway restaurants - underpinned its move into delivery and would prove an advantage over rivals, which started in delivery and were now adding restaurants that do their own delivery to their platforms.
“I think Deliveroo were the last people to announce (own-delivery restaurants onto its platform) and we’ve seen no material impact from them in the six months since they’ve been engaging in that level of competition,” he said.
“Most recently Uber have said they are going to do the same and we expect we are going to win in that way as well.”
Chief Financial Officer Paul Harrison said he was confident delivery activity would become profitable. “We do see 2019 as being the peak year of investment in delivery,” he said.
Cat Rock, which holds 2 percent of Just East and has a stake in Takeaway.com, repeated its call for a merger between Just Eat and a peer, saying this would offer “a very attractive avenue for securing world-class leadership, delivery expertise, and a premium.”
It also said in a statement that Duffy’s decision not to seek the CEO post permanently would allow the board to find “a leader with the appropriate online food delivery experience.”
Duffy declined to comment on any merger speculation beyond saying more sector consolidation was inevitable.
Shares in Just Eat were trading down 0.6 percent at 775 pence at 1357 GMT, after it reported a 43 percent rise in 2018 revenue to 779.5 million pounds ($1.0 billion) and a 6 percent rise in underlying core earnings to 173.9 million pounds.
Just Eat said it expected to grow its marketplace margin year-on-year. It also said it expected to report 2019 revenue of 1.0 billion-1.1 billion pounds and underlying core earnings of 185 million-205 million pounds, both excluding its shares in online delivery firms in Brazil and Mexico.
Hargreaves Lansdown analyst Laith Khalaf said Just Eat’s underlying growth was impressive but the lack of clarity about the CEO succession and absence of discussion about any merger or acquisition “largely explains the weak reaction to the results.”
($1 = 0.7614 pounds)
Editing by Alexandra Hudson and Edmund Blair