Deliveroo hikes forecasts as food delivery demand stays strong

  • Upgrades annual order value growth to between 50% and 60%
  • Sees FY gross profit margins at lower half of prior estimate
  • Shares rise 4%

July 8 (Reuters) - Britain's Deliveroo (ROO.L) reported an 88% jump in quarterly food orders and raised its annual order value forecasts on Thursday, as people remained hooked on having meals and groceries delivered to their home.

The food-delivery firm, which connects customers with over 115,000 restaurants and grocers in the UK and 11 other countries, predicted gross transaction value (GTV) would grow 50%-60% in 2021, compared with an earlier forecast of 30%-40%.

Shares in Deliveroo, which fell 30% in their London market debut in March, climbed 4% to 333.7 pence by 0805 GMT. They are still down 14% so far from their initial public offering price.

Deliveroo and rivals like Just Eat (TKWY.AS) - which make money by taking a percentage of each order - have enjoyed a surge in both meal and grocery orders as coronavirus curbs forced outdoor shops and restaurants to close.

Still, Deliveroo said investments in "growth opportunities" this year and its expectation that average order values would at some point revert towards pre-Covid levels, led it to estimate profit margins were likely to come in at the lower end of a 7.5% to 8% range it had given earlier.

"We believe trading (for Deliveroo) is likely to be driven by both businesses, food delivery and grocery," analysts at J.P. Morgan said in a client note. "The higher investments are not a surprise, given higher investments also for peers."

Just over half of Deliveroo's GTV - the monetary value of all orders minus any tips - came from the United Kingdom and Ireland in the quarter ended June, it said.

Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips, Uttaresh.V and Elaine Hardcastle

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