Talabat's parent company Delivery Hero to beef up its investments in 2021

Delivery Hero has invested extensively in both food delivery and so-called quick commerce, which aims to deliver goods in as little as 10 to 15 minutes

FILE PHOTO: The Delivery Hero headquarters is pictured in Berlin, Germany, June 2, 2017. The Berlin-based company Delivery Hero, one of Europe's largest internet start-ups. REUTERS/Fabrizio Bensch/File Photo

Delivery Hero, the German parent company of food delivery service Talabat, is considering ratcheting up its investments as it seeks to ride first-half momentum to win more market share, its finance chief said.

The Berlin-based group raised its 2021 revenue and gross merchandise volume outlook, but tweaked its forecast for adjusted core operating margin to minus 2 per cent, at the lower end of its previous forecast.

“The small implied downgrade to consensus Ebitda [earnings before interest, tax, depreciation and amortisation] today comes at a difficult time,” Jefferies said after the earnings report.

The group returned to its home market Germany earlier this year amid a furious boom in rapid delivery there, pitting it against start-ups like Gorillas that are attracting lavish backing from venture capital investors.

With demand for at-home deliveries surging during the pandemic, Delivery Hero has invested extensively both in food delivery and in so-called quick commerce, which aims to deliver goods in as little as 10 to 15 minutes.

“We are considering investing a little bit more,” said chief financial officer Emmanuel Thomassin. He said the additional investments would be in core operations, while the €550 million ($645.77m) full-year investment goal for new markets remained unchanged.

The company, which operates in about 50 countries across Europe, Latin America, Asia, the Middle East and North Africa, now sees revenue in a range from €6.4bn to €6.7bn for the year, compared with earlier expectations of €6.1bn to €6.6bn.

It more than doubled quarterly revenue to €1.55bn, on continued strong demand for its food and rapid delivery services, even as pandemic-related restrictions were eased across its markets.

Chief executive Niklas Oestberg said, however, it would take time before investments in quick delivery began paying off.

“Quick delivery will be a huge part of Delivery Hero. But the margins in groceries are incredibly low,” Mr Oestberg said. “In order to make it economical we need to innovate and improve. It is still a long way to go.”

When asked earlier about the 5.09 per cent stake in Deliveroo it took earlier this month, Mr Oestberg said it made financial and strategic sense, without elaborating.

Updated: August 13th 2021, 6:02 AM
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