Delivery Hero tumbles on change to Spanish worker conditions

Delivery Hero's shares tumbled on Monday morning, after the company announced a major operational shift for its Spanish subsidiary Glovo.

The Germany-based food delivery platform said it would transition its Spanish delivery riders from freelance contracts to full employment to address ongoing legal and regulatory challenges.

That would align with Spain's 2021 ‘Rider Law’, which mandated that gig-economy companies employ their riders directly.

The transition was expected to impact Delivery Hero's adjusted EBITDA by €100m in the 2025 financial year.

Analysts had previously forecast an adjusted EBITDA of €1.15bn for the year.

Additionally, the company expected to record a contingency range of €440m to €770m in its 2024 accounts, reflecting increased costs from social security contributions, fines, VAT claims, and other charges.

Those expenses stemmed from historical labour violations, for which Glovo had already faced fines totaling over €135m.

To offset financial pressures, Delivery Hero had been recently restructuring its operations.

Last week, it increased the size of the initial public offering of Talabat, its Middle East unit, aiming to raise up to $2bn when trading starts in Dubai on 10 December.

The proceeds would help address its high debt levels, which analysts warned could remain elevated at around twice its EBITDA by 2025 without additional measures, such as completing the sale of its Taiwan operations.

Meanwhile, competitors such as Just Eat Takeaway, which already employs riders in Spain, were expected to benefit from the cost parity created by Glovo’s decision.

At 1148 CET (1048 GMT), shares in Delivery Hero were down 11.13% at €34.43.

Reporting by Josh White for Sharecast.com.