LONDON :Meal delivery company Deliveroo has pushed back its margin growth forecast after a slower than expected recovery in consumer confidence, spurring a drop in shares on Thursday that wiped out a year’s worth of gains.
That was despite the British company, which competes with Just Eat and Uber Eats, reporting its first year of statutory profit and positive cash flow.
It made a profit of 2.9 million pounds ($3.8 million) last year versus a loss of 31.8 million pounds in 2023. Core earnings were at the top end of guidance at 129.6 million pounds.
However, Chief Executive Will Shu said he had expected the consumer environment to recover “a bit faster” when he set the target in 2023 to expand the core earnings margin to 4 per cent “by 2026”, with further potential upside beyond.
Deliveroo now expects margin growth to accelerate “from 2026”, reaching 4 per cent in the medium term.
“The consumer market since our capital markets event hasn’t been the smoothest,” Shu said in an interview.
Shares in the group fell 9 per cent in early deals, wiping out gains from the previous 12 months.
Jefferies analysts said the new margin timeline was “a blemish” but that analysts’ consensus forecast “was already far behind the old timeline”.
Shu, who founded Deliveroo 12 years ago, said growth in gross transaction value – a key performance measure – had picked up in the second half of 2024 and order growth in its biggest market, Britain and Ireland, had accelerated every quarter.
“Q1 trading has been good,” he said. “We don’t see any differences from the latter part of last year into Q1.”
He said Deliveroo could continue to grow “by focusing on the levers in our control”, including focusing on value and its tiered membership programmes.
Deliveroo said on Monday it would leave Hong Kong after nine years, selling some assets to Delivery Hero’s foodpanda.
Shu said Hong Kong was “by far the most promiscuous market in terms of user behaviour and the most discount-led”, adding that the reasons for the exit were “very market specific”.
The departure will leave Deliveroo in seven international markets as well as Britain and Ireland.
Deliveroo had already reported in January a 6 per cent rise in GTV in 2024.
($1 = 0.7723 pounds)
