The international delivery service Delivery Hero wants to make it into the black with new loans. On Monday, CEO Niklas Östberg described the financing transaction totaling 1.4 billion euros as an “important milestone” in becoming profitable at group level. The internationally active Berlin company is now aiming for this for the coming year, i.e. 2023.
Due to extensive investments – including the expensive expansion of the business with deliveries of supermarket articles and the takeover of Glovo in Spain – Delivery Hero has so far been in the red. In 2020 alone, an operating loss of 568 million euros was incurred. For financing, Delivery Hero has issued convertible bonds, the tranches of which are now gradually maturing and are to be serviced with the help of the new loans.
The plan was well received on the stock market. The paper listed in the leading index Dax jumped by well over ten percent. Most recently, Delivery Hero had come under a lot of pressure on the stock exchange. In February alone, the stock fell more than 30 percent as investors realized that losses were bigger than expected and the company was cautious about looking ahead. Specifically, Delivery Hero’s financing transaction consists of two lines of credit totaling almost EUR 1.05 billion with a term of 5.25 years and a revolving syndicated loan of EUR 375 million with a preliminary term of three years. “We have built a solid and diversified capital structure that gives us financial flexibility and ample liquidity buffers to deliver on our strategic priorities,” said Östberg.
The Berlin company also wants to increasingly deliver other things
Delivery Hero is growing rapidly because people have gotten used to ordering their meals online and having them delivered to their homes during the Corona crisis. According to the company, sales increased by 53 percent in the first two months of 2022. However, Delivery Hero not only wants to provide its customers with restaurant food, but also with groceries and other supermarket items. That costs a lot, and investors now want to know how and when the business will ultimately become profitable.
According to earlier reports, the food delivery business is expected to breakeven based on operating results as early as this year. The food delivery business should continue to write deep red numbers with minus 525 million euros. In order to curb the losses somewhat, Delivery Hero quickly ended the short and expensive trip to the German market, wants to sell the Japan business and turn the Rappi stake into money.