Just Eat Takeaway.com (JET) has been forced to take a €5 billion writedown on the multi billion euro deal that created Europe’s largest food delivery group when it merged with Grubhub and Takeaway.com.
The food delivery giant reported a €5.7 billion loss in its full-year earnings for 2022, up from €1 billion a year ago, largely due to a €4.6 billion impairment charge on past equity-funded acquisitions.
This included the writedowns for its $7.3 billion acquisition of US-based Grubhub and Just Eat’s merger with Takeaway.com in 2020.
JET said this was due to the increasing interest rates and other macroeconomic factors.
It also recorded a €275 million loss from the sale of its stake in Brazilian food delivery app business iFood in August 2022.
As a result, the company’s shares tumbled by as much as 10% in morning trading on Wednesday after it made no change to its guidance for 2023.
Adjusted earnings came in at €19 million for 2022, compared with minus €350 million in 2021, in line with a trading update in January. It expects adjusted earnings to rise to €225 million in 2023.
The losses come at a bad time for the company, as it struggles to find a buyer for Grubhub, which it purchased in June 2020 as part of a push into the US as the pandemic-fuelled food delivery boom was still making waves.
Activist investors put pressure on JET to explore a sale in Grubhub in April 2022 after the valuation of the Amsterdam-listed firm fell below what it paid for Grubhub.
The entire group is now valued at €4.2bn.
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“We have been very close to a sale and the problem was the changing financial environment at the beginning of last year,” chief executive Jitse Groen told the Financial Times.
“If you’re in a process with a buyer and the buyer loses the financial strength to be able to complete the transaction, then you’re kind of stuck,” he added.
Groen claimed that buyers were waiting for fee caps on delivery firms to be lifted in US cities including New York, San Francisco and Seattle to ascertain the future profitability of the company.
The caps were imposed during the pandemic to limit the amount companies could charge restaurants for deliveries, having a negative impact on Grubhub, UberEats and DoorDash.
“There’s very little M&A and there’s uncertainty about the future profitability of Grubhub because of fee caps. If they are lifted, there’s a new situation to look at,” he said.
Gross transaction value (GMV) came in at €28.2 billion, while order numbers also fell by 9% from 1.1 billion to 984 million, however customers spend 3% more on average per order.
Groen said customers were weathering cost of living pressures and the business was benefiting from rising restaurant prices, but that it would not raise delivery fees this year.
“Restaurants are increasing their prices because costs are going up,” Groen added. “[Customer] prices will go up but I don’t think it will be caused by us [raising fees]”.
