Deliveroo has forecast annual profits to surpass the top end of guidance, following modest fourth-quarter growth and despite a decline in order volumes.
The food delivery group anticipates adjusted earnings before nasties to be ‘slightly above’ the £60million to £80million guidance range for 2023.
Deliveroo upgraded its profit outlook in August from a previous forecast of £20million to £50million, thanks to rising advertising income offsetting a decline in order volumes during the first half of the year.
Profit outlook: The food delivery group anticipates adjusted earnings before nasties to be ‘slightly above’ the £60million to £80million guidance range for 2023
Deliveroo’s total orders dropped by about 9 million to 290.2 million in 2023 as cost-of-living pressures discouraged more consumers from eating takeaways.
Yet its gross transaction value (GTV) – the total worth of orders processed on the platform – increased by 3 per cent at constant currency levels to £7.06billion, which was in line with expectations.
In the final three months of the year, the firm’s GTV rose by 4 per cent to £1.86billion thanks to a return to growth internationally and strong trade across the British Isles.
Simultaneously, turnover tipped up by £2million to £523million, with rising revenues in the UK and Ireland compensating for lower international sales.
Deliveroo credited the modest gain to investment in consumer fees and a switch in spending towards promotional marketing activity.
Will Shu, co-founder and chief executive of Deliveroo, said he was ‘really proud of the team’s execution in Q4, including launching our retail offering’.
The London-listed business recently started a ‘shopping’ section where customers can buy products such as healthcare, flowers, DIY and electronics.
Shu added: ‘As we saw ongoing signs of stabilisation in consumer behaviour in the quarter, we continued to invest in the consumer value proposition to lay the foundations for future growth.’
Deliveroo shares were 2.3 per cent down at 131.7p on Friday afternoon, meaning they have lost around two-thirds of their value since the company’s disastrous listing in March 2021.
Since being founded, the group has struggled to turn a profit due to soaring marketing, technology and employee costs as it has sought to compete with rival delivery apps like Just Eat and Uber Eats.
This was despite orders skyrocketing, especially during the early part of the Covid-19 pandemic lockdowns.
Early last year, Deliveroo said it would cut roughly 350 jobs after orders slowed amid a lack of lockdown restrictions and worsening inflationary pressures.
Following a slump in the firm’s half-year losses, Deliveroo returned £250million to shareholders through a premium tender offer.
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