Just Eat hikes profit and cash flow forecasts, shares jump

By Michal Aleksandrowicz

(Reuters) -Just Eat Takeaway.com raised its core profit and cash flow forecasts on Wednesday after returning to growth in Northern Europe, Britain and Ireland, sending shares in Europe's biggest meal delivery company up 3%.

Food delivery firms are looking to shift to stable profitability after the sector boomed during the pandemic, even as they invest more in marketing to help retain customers.

Just Eat has hired celebrities such as singers Christina Aguilera, Katy Perry and rapper Snoop Doggy Dogg for its ad campaigns. This translates into "top of mind awareness" rather than straight into orders, CEO Jitse Groen told reporters.

It forecast adjusted core earnings of about 310 million euros ($328 million) for 2023, up from a previous guidance of about 275 million euros.

The group is boosting profits by improving algorithms and IT systems with "a lot of improvements" to come, Groen said, but did not provide details.

It reported 6% growth in Northern European gross transaction value (GTV) in the third quarter, with a 4% increase in Britain and Ireland. However, it posted an 11% drop in North America.

That decline was due to a slower recovery in Canada and the strength of the U.S. dollar, Groen said.

"We do expect the situation in North America to continue to improve," helped by a partnership with Amazon announced in 2022, he said.

The group said it was still exploring a partial or full sale of its U.S. unit Grubhub.

The company expects to reach free cash flow break-even in the second half of 2023, earlier than its previous mid-2024 goal. It sees GTV falling by about 4% this year, at the low end of its previous forecast range.

($1 = 0.9457 euros)

(Reporting by Michal Aleksandrowicz in Gdansk; editing by Milla Nissi and Muralikumar Anantharaman)