Delivery Hero Hits 6-Month High on Improving Profit Outlook

By Geoffrey Smith 

Investing.com -- Delivery Hero (F:DHER) stock surged over 11% to its highest since February in Frankfurt on Tuesday after the food delivery group said underlying earnings will be better than previously expected this year.

The food delivery group, which generates more than 70% of its sales in Asia, said it expects to break even at the level of underlying earnings before interest, taxes, depreciation, and amortization in the third quarter, earlier than planned. It said that Asia was already profitable at the adjusted EBITDA level in the second quarter, while at the group level, it broke even in May and June.

For the fourth quarter, it said it expects adjusted EBITDA of between 40 million and 120 million euros ($40.5 million-$121.6 million).

Last month, Delivery Hero had said it would focus more on improving profitability after being caught out badly by the rout of 'profitless tech' stocks across the world in the second quarter. At the time, it had still expected a negative EBITDA margin of as much as 1%.

The efficiency drive, together with the partial repurchase of its convertible bonds due in 2024, has squeezed the stock higher in recent weeks.

Chief Financial Officer Emmanuel Thomassin said the group had had a "solid" second quarter in all its segments, with gross merchandise value - the total value of orders processed by its platform - rising by 18% to 9.9 billion euros. Even after adjusting for the euro's depreciation, revenue generated by those sales was up 31% from a year earlier at 2.13 billion euros.

The third quarter will see the Berlin-based group consolidate with Spanish-based Glovo for the first time, something that will bolster the non-Asian side of its business. On a like-for-like basis, including Glovo, the group expects GMV growth of 7% in the current quarter.