BREAKING NEWS

BREAKING NEWS

Just Eat sees route to profitable delivery after 2019 investment peak

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By Paul Sandle

LONDON (Reuters) - Online takeaway service Just Eat Plc said it was confident it could see off the threat from newer rivals Uber Eats and Deliveroo, with its own delivery service on track to become profitable after investment peaks this year.

The company, which took its 500 millionth order in Britain last month on its platform of 30,000 independent takeaways, has expanded into its own home delivery, investing 51 million pounds in its hybrid model in 2018 alone.

Interim CEO Peter Duffy, who stepped into the role after Peter Plumb abruptly left in January, said the group's Canadian business, which broke even in the last quarter, showed there was "a clear path to profitability" for home delivery.

Plumb increased investment in home delivery and technology, but an absence of profit targets drew criticism from activist investor Cat Rock.

Duffy, who has also been opposed by Cat Rock, said he was not in the running for the job permanently.

"I have decided I don't want to be a candidate in that process," he told reporters on Wednesday.

He said Just Eat's profitable marketplace - its well established platform for takeaway restaurants - underpinned its move into delivery, and would prove an advantage over rivals expanding in the opposite direction.

"I think Deliveroo were the last people to announce (a move into marketplace) and we've seen no material impact from them in the six months since they've been engaging in that level of competition," he said.

"Most recently Uber have said they are going to do the same and we expect we are going to win in that way as well."

Chief Financial Officer Paul Harrison said he was confident that all delivery activity would move into profit in the coming years. "We do see 2019 as being the peak year of investment in delivery," he said.

Cat Rock, which also has a stake in Dutch-listed Takeaway.com, said last month that Just Eat could generate "significant value" by negotiating a merger with one of its peers.

Duffy declined to comment on any merger speculation beyond saying that more consolidation was inevitable in the sector, both within geographies and across geographies.

Shares in Just Eat were trading down 0.6 percent at 775 pence at 1016 GMT, after it reported a 43 percent rise in 2018 revenue to 779.5 million pounds and a 6 percent rise in underlying core earnings to 173.9 million pounds.

Just Eat said it now expected to grow its marketplace margin year-on-year, and it expected to report 2019 revenue of 1.0-1.1 billion pounds and underlying core earnings of 185-205 million pounds, both excluding its shares in online delivery firms in Brazil and Mexico.

Hargreaves Lansdown analyst Laith Khalaf said Just Eat's underlying growth was impressive, but there was nothing for those hoping for fireworks in the near term.

He said the CEO succession was undecided and there was no discussion of merging with anyone else, nor of demerging or selling its minority stakes.

"That largely explains the weak reaction to the results," he said. 

(Editing by Louise Heavens, Jan Harvey and Alexandra Hudson)

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