Grab cuts 2021 earnings outlook on worsening Covid-19 outbreak

One of the biggest South-East Asian ride-hailing and delivery company revised down its full-year adjusted net sales forecast

Grab’s net profit during the second quarter widened to $815m from $718m a year earlier. AP Photo

Grab, South-East Asia’s ride-hailing and delivery giant, cut projections for 2021 as the region is battling one of the world’s worst Covid-19 outbreaks due to the fast-spreading delta variant.

The Singapore-based company, which is set to go public in the US through a deal with a blank-cheque company, expects full-year adjusted net sales of $2.1 billion to $2.2bn, according to a statement on Tuesday. That compares with $2.3bn it forecast in an investor presentation in April. Grab also expects full-year gross merchandise value of $15bn to $15.5bn, compared with an earlier projection of $16.7bn.

“The delta variant has unfortunately hit the region hard,” chief executive Anthony Tan said during the company’s earnings call on Tuesday. “Southeast Asia now has the world’s highest Covid mortality rate per capita and lockdown measures are still in place across major cities in the region.”

In Vietnam, even food delivery services are being restricted, affecting Grab’s business, he added.

With infections rising as the more contagious delta variant spreads, many parts of South-East Asia, home to 650 million people, have re-imposed curbs on movement that hamper consumer-reliant economies. Lockdowns have devastated businesses and dealt a setback to the region’s middle class. In July, the Asian Development Bank downgraded its South-East Asian growth forecast to 4 per cent from 4.4 per cent.

During the second quarter, Grab’s net loss widened to $815 million from $718m a year earlier. Revenue more than doubled to $180m.

Grab reported its second quarterly financial results as it prepares to merge with Altimeter Growth, the special purpose acquisition company of Brad Gerstner’s Altimeter Capital Management. Grab has postponed the $40bn deal – one of the largest-ever mergers with a Spac – to the fourth quarter as it works on an audit of the past three years’ accounts.

Grab reiterated on Tuesday the merger is set to close this year.

“We remain on track to becoming a publicly listed company and to complete our business merger with Altimeter Growth in the fourth quarter of this year,” chief financial officer Peter Oey said.

The company said its adjusted net sales, a metric that doesn't comply with the International Financial Reporting Standards, rose 92 per cent to $550m in the second quarter. Its second-quarter gross merchandise value grew 62 per cent to a record $3.9bn, led by mobility services, while deliveries revenue was $45m, up 92 per cent from a year ago.

The company's mobility revenue climbed 129 per cent from a year earlier to $118m, while its financial services revenue was $6m, up 156 per cent from a year ago.

Grab expects demand for mobility services to improve in the coming quarters as vaccination rates increase across the region. It also plans to launch 10 new GrabKitchens in the second half of this year.