Orders at Just Eat rise by nearly a third in slower growth

Orders at Just Eat, Europe’s largest takeaway ordering website by sales, rose more than a third in 2016 but was slower than in previous years, disappointing investors.

Shares in the FTSE 250 group fell more than 5 per cent in the first hour of trading on Tuesday, with analysts blaming a slowdown in the UK and a stagnant profit forecast for the sell-off.

Just Eat, which acts as a middleman connecting restaurants with customers through its app and website, said on Tuesday that like-for-like orders across the group had risen 36 per cent in the past calendar year, with orders in the UK, its home market, up 31 per cent.

Total orders across the group climbed 42 per cent in the 12 months to December 31st.

UK supermarket Morrisons beats forecasts with strong Christmas

---

William Hill reports profit at bottom of guidance range

---

UK’s big supermarkets set to report solid Christmas trading

---

Seismic shift is under way in global retail towards digital

---

The figures demonstrated a slowdown in growth, however. In 2014, Just Eat reported a 50 per cent rise in group like-for-like orders year on year and a 46 per cent increase the following year. In the first half of 2016, like-for-like orders in the UK increased 37 per cent year on year.

Profit forecasts

David Buttress, Just Eat chief executive, said the rise in orders in 2016 put the company in a “strong position” to report results in line with earlier guidance when it publishes its full-year results in March.

Just Eat has upgraded its profit forecasts three times for 2016, and five times in the past two years.

Most recently, the group said in November that it expected full-year revenues to be between £368 million (€423.3m) and £371 million at constant exchange rates. Underlying earnings before interest, tax, depreciation and amortisation are forecast to be between £109 million and £111 million.

David Reynolds, an analyst at Jefferies, said that while Tuesday’s numbers were in line with expectations, after five guidance upgrades in less than two years, the latest update was “likely to disappoint”.

“No real knocks to the thesis, just a reality check as the guidance upgrade conveyor belt comes to a stop,” he said.

Just Eat has historically benefited from increased consumer appetite for food delivery. Figures from Euromonitor, the market research company, show that growth in the home delivery and takeaway food sector has outpaced that of restaurants each year since the financial crisis.

Increased competition

In recent years, however, Just Eat has faced increased competition from London-based Deliveroo, as well as Uber and Amazon's food delivery services.

Mr Buttress said on Tuesday that Just Eat was entering 2017 with “continuing confidence in the business”.

Just Eat, which is based in London, launched in Denmark in 2001. The group made its debut on the London Stock Exchange in 2014 and now has more than 17 million active customers.

Around two-thirds of Just Eat’s revenues are generated in the UK. But in recent years the company has sought to diversify with sites in Ireland, Australia, New Zealand, Brazil, Mexico, Switzerland, Italy, Canada and Spain.

Last month, Just Eat said it had agreed to buy Hungryhouse in the UK and Canada’s SkipTheDishes for between £260 million and £300 million.

– Copyright The Financial Times Limited 2017