By Scott Kanowsky
Investing.com -- Shares in Just Eat Takeaway (AS:TKWY) edged higher on Wednesday, paring back an initial slide in early European trading, as the food delivery service backed its path to profitability despite lower-than-expected first-half sales.
Revenue rose by 7% to €2.78 billion - but just missed estimates of €2.8 billion - as a boost from higher pricing and positive currency movements was weighed down by a post-pandemic slide in demand.
Adjusted earnings before interest, tax, depreciation and amortization improved by 29% during the first six months of the year yet remained in negative territory at negative €134 million. Just Eat reported a loss of €189 million in the corresponding period last year.
Performance in the U.K. and Ireland was a particular standout, with the segment's core profit jumping by 70% to minus €18 million and offsetting a slide in its Just Eat Northern European division. The business also swung to a profit in the second quarter.
The company cited the shrinking group-wide loss as evidence of momentum in its plan to return to a profit.
"Our path to profitability is accelerating and we expect to continue to materially improve our Adjusted EBITDA in the second half of this year and to be Adjusted EBITDA positive at a Group level in 2023,” said chief executive officer Jitse Groen in a statement.
Just Eat reiterated its expectation that it will reach positive core earnings during its 2023 fiscal year. It also confirmed its annual financial guidance, adding it sees gross transaction value growing to the mid-single digit year-on-year and adjusted core income margin in the range of -0.5% to -0.7% of GTV.
Meanwhile, the company "continues to actively explore the partial or full sale of Grubhub". Shareholders have been placing pressure on Just Eat into selling the U.S. unit - which it first bought for $7.3 billion in 2021 - amid concerns over the Amsterdam-based group's future profitability. The company has previously warned of a slowdown in annual customer spending, while competition from rivals like Deliveroo (LON:ROO) and Uber (NYSE:UBER) remains intense.
Just Eat said it took a €3.5 billion impairment charge on Grubhub due to a decline in sector-wide valuations.
In July, Just Eat moved to try to increase Grubhub's competitiveness by inking a deal with Amazon (NASDAQ:AMZN) that allows the tech giant's Prime members in the U.S. to have a free one-year subscription to Just Eat's Grubhub+ offering.
Shares in Just Eat are down by more than 75% in the past one-year period.