Delivery Hero’s profit motive relieves investors

2 minute read

A Foodora delivery cyclist poses in front of the Delivery Hero headquarters in Berlin, Germany, June 2, 2017. REUTERS/Fabrizio Bensch

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LONDON, Jan 11 (Reuters Breakingviews) - Food delivery groups are belatedly serving up a helping of profitability. Delivery Hero (DHER.DE) late on Monday said it expects the business of dropping off takeaway meals to break even on an adjusted EBITDA level by the second half of the year. The shift reflects Chief Executive Niklas Östberg’s recent purchase of a majority stake in Spanish rival Glovo and his decision last month to conserve cash by pulling out of Germany. The 21 billion euro group now expects its food delivery unit to earn adjusted EBITDA of up to 100 million euros in the final quarter of 2022. Meanwhile, investment in on-demand groceries will peak in the next three months.

Analysts previously expected Delivery Hero to report negative EBITDA of more than 500 million euros this year, and still be in the red in 2023. Those forecasts may now change. It’s part of a broader shift away from the grow-at-all-costs business model. Uber Technologies (UBER.N) plans to exit its unprofitable food delivery business in Brazil, Reuters reported last week read more . For investors who pushed up Delivery Hero shares 6% on Tuesday morning, the switch is overdue. (By Karen Kwok)

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Editing by Peter Thal Larsen and Oliver Taslic

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