Acquisitions and the expansion into new markets have caused the food delivery service Delivery Hero to be deeply in the red in the first half of the year: the bottom line is that the Dax group made a loss of more than 918 million euros in the first six months, as the company announced on Thursday. That was twice as much minus as in the same period last year, when the deficit was 448 million euros. Large losses are not uncommon for companies like Delivery Hero. As with the great Amazon, they invest massively in growth in the first few years in order to displace competitors and to be able to benefit from them later – at least that’s the plan.
In its current business, the online delivery service, like the entire industry, benefited from the significantly increased demand for food deliveries during the Corona crisis: Delivery Hero recorded 1.2 billion orders in the first half of the year, more than twice as many as in the same period of the previous year. The figures for competitor Woowa, which was bought in South Korea, are not yet included. The same applies to sales, which the group was also able to more than double to 2.68 billion euros. The investors were not enthusiastic, the share was 3.2 percent lower at the end of the Dax.
The Berlin company is particularly well represented in Asia, where the business has huge growth potential. Almost half of the revenues are generated in local markets. In March, Delivery Hero was able to take over the Woowa delivery service in South Korea, but had to sell its own local brand Yogiyo. Delivery Hero announced the purchase at the end of 2019. At that time, the companies had agreed on a price of 3.6 billion euros. Around 1.7 billion euros of this should flow in cash, the rest will be paid for with Delivery Hero shares.
CEO Niklas Östberg continues to focus on growth at the expense of profitability. In operational terms, Delivery Hero suffered a loss (adjusted Ebitda) of 350.8 million euros from January to the end of June, after minus 319.8 million a year earlier. The conclusion of the Woowa purchase in March of this year put further pressure on the balance sheet.
In Europe, on the other hand, Delivery Hero has been on the road with local brands in northern and eastern European countries in recent years. The group had also sold its entire German business in 2019. Since May of this year, Östberg has dared to re-enter the highly competitive German market under the Foodpanda brand. The company offers both restaurant and daily grocery deliveries. However, Delivery Hero is also struggling with new competitors such as Gorillas in this area.