Deliveroo plans more cash for shareholders as profit nears

Adjusted earnings before interest, taxes, depreciation and amortization rose to £39m (€45m) for the first half of the year, the company said in a statement on Thursday. Picture Denis Minihane.

Deliveroo took strides toward hitting a profit in the first half of the year, continuing a trend of delivery companies rebounding after a rough post-pandemic period. 

The London-based delivery company also raised its earnings guidance for the full year to a range of £60-80m (€69-92m). It was previously at £20-50m (€23-57m).

Adjusted earnings before interest, taxes, depreciation and amortization rose to £39m (€45m) for the first half of the year, the company said in a statement on Thursday. This beat the £18.1m (€21m) estimated by analysts surveyed by Bloomberg.

Deliveroo said it plans to grant £250m (€289m) of “structural surplus capital” to shareholders, giving a total of £300m (€347m) for the year. In an interview, Chief Executive Officer Will Shu said the company was consulting with investors to find the proper “mechanism” for the capital return.

Shu also said the returns won’t change the company’s focus on keeping costs low. “It’s about discipline here,” he said.

Customers placed 145.2m orders in the first half, a drop from the prior year as inflation weighs on household spending. Gross transaction value, a measure of customer orders, grew 1% at constant currency to £3.51bn (€4bn), compared to £3.41bn (€3.95bn) a year earlier.

European food delivery companies have been focused on cutting costs to boost profitability after growth slumped following a pandemic-era boom. 

Deliveroo cut 9% of its workforce earlier this year, saying it needed to focus on profits in a “difficult consumer environment.” The company previously said it reached a key milestone of profitability in the second half of 2022, as it reduced headcount and scaled back operations in some markets.

Deliveroo’s results round off a broadly positive first half for food delivery companies as restructuring pays off despite the squeeze on household spending. 

Delivery Hero’s shares jumped as much as 6% on Wednesday after Asian markets returned to growth, prompting the company to raise revenue guidance for the full year. Just Eat swung to a profit in July this year as its first-half earnings beat analysts’ estimates after cost-cutting and restructuring measures boosted profitability.

Bloomberg