Just Eat has investment on the menu after taking ?180m Australia hit

Just Eat’s new boss will plough ?50m into bolstering the company’s defences against major rivals after it took a huge write-down against its Australian business.
Peter Plumb, who took control of the firm in September having run previously, said the company would invest in developing its delivery services in the UK, Canada and Australia & New Zealand alongside existing expenditure plans.
Unlike Deliveroo and Uber Eats, takeaway orders placed on Just Eat are delivered by staff at the restaurant. But Just Eat has been trialling a delivery service for major branded restaurant chains in the UK such as KFC and Burger King using third party couriers.
Just Eat will now expand these trials as part of the investment and also put more money into delivery services in other countries where it operates.
This includes in New Zealand and Australia, where the company was forced to book a ?180m impairment for the year. Just Eat said it faced particularly competitive market competition in Australia, where its customers are concentrated in Sydney and Melbourne, and that a cut in forecast cash flow had forced it to reassess the business’s future prospects.
Just Eat
The company plans to launch its own delivery service in Australia in the near future, instead of relying on restaurants’ own drivers, but said accounting rules forbade it from including the potential benefits of that in its results.
Analysts at Berenberg said the increased investment in Australia and the impairment charge did “not sound too positive to us”.
“While management and investors often point to these impairment charges as being non-cash, the scale of the impairment leads us to believe the outlook (and thus future cash flows) for this division is materially worse than both this time last year and when the company was acquired back in 2015,” the broker said.
Berenberg added that the ?50m investment by Mr Plumb meant underlying earnings for this year would be between ?165m-?185m, “materially below our published estimates and consensus of ?226m”.
Just Eat has investment on the menu after taking ?180m Australia hit

Just Eat is looking to step up its efforts in delivery, which have included using a robot

John Phillips/Getty Mages
The Australian write-down meant the company, which was promoted to the FTSE 100 last year, reported a ?76m loss in 2017, compared with a ?91m pre-tax profit in 2016 and analyst profit forecasts of ?118m. Excluding the impairment and other one-offs, pre-tax profits were up at ?104m.
The profit hit knocked as much as 15pc off the company’s shares in early trading although the stock regained some ground through the afternoon, with shares currently trading down 11pc at 755p.
However, Just Eat served up a 45pc surge in revenues to ?546m in 2017 as it continued its rapid global expansion, including the acquisition of Canadian rival SkipTheDishes.
Mr Plumb said this acquisition had not only brought with it customers in a new country but some sophisticated technology which would be used in other territories, including Australia.
In the UK, revenues were up 28pc in the year to ?303.8m and the company said it handled a record 500,000 daily orders on the day of the X Factor final in December.
Mr Plumb said the company would now be focused on integrating its recent Hungryhouse acquisition, which will give yet a further foothold in the UK market. Even prior to the acquisition, Just Eat boasted 10.5m active customers in 2017, up from 9.2m in 2016.
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