Just Eat ups full-year core profit guidance

Just Eat Takeaway lifted its full-year core profit guidance on Wednesday as it announced the launch of a new share buyback programme of up to €150m.

In an update for the third quarter, the company said that excluding North America, it returned to gross transaction value (GTV) growth. GTV in Northern Europe was up 6%, while the UK and Ireland saw an increase of 4%.

Just Eat lifted its 2023 adjusted EBITDA guidance to around €310m, from €275m previously.

It also said it now expects constant currency GTV growth to be around -4% year-on-year in 2023, versus a previous range of -4% to +2% year-on-year in 2023.

The company expects to break even on free cash flow in the second half of the year, which is ahead of its previous target of mid-2024.

Long-term objectives remain the same, it said, noting that it is still exploring the partial or full sale of Grubhub.

Chief executive Jitse Groen said: "The majority of our business has returned to GTV growth in the third quarter with particular strong momentum in Northern Europe and the UK and Ireland segments.

"Within the UK and Ireland we continue to invest significantly whilst at the same time increasing profitability. Although the recovery of North America is on a slower trajectory, we are satisfied that this segment too is rapidly becoming cash flow neutral. As a result, we are in a position to upgrade both our adjusted EBITDA and cash flow guidance and now expect to be approximately cash flow break-even in the second half of 2023 and positive thereafter."

At 1110 BST, the shares were up 2% at 1,060p.

Russ Mould, investment director at AJ Bell, said: "A company as established as Just Eat Takeaway shouldn’t be crossing its fingers hoping to be cash flow break-even. That’s the sort of situation you would expect from an immature business that is starting to gain traction selling its products and services, not from a company that was once a member of the prestigious FTSE 100 index.

"It feels like Just Eat is stuck in the mud - always declaring progress but always being held back by some part of its business. North America is the latest problem child for the group.

"During the pandemic people were happy to order in food as there were restrictions on movement which meant they could not go out for a meal when they wanted. Naturally that benefited food delivery platforms like Just Eat – but post-pandemic the sector is finding life a lot tougher.

"Takeaway food can be incredibly expensive and with interest rates and inflation remaining stubbornly high, orders via platforms such as Just Eat are in decline.

"Its share price may have moved higher on the latest trading update yet that’s merely down to upgraded earnings guidance. On a longer-term basis this stock has been as stale as a supermarket Danish pastry, down 89% in value over the past three years."