Delivery Hero set for best day in over seven months on upbeat growth outlook, profit focus

By Linda Pasquini

(Reuters) -Delivery Hero shares rose as much as 15% on Thursday after the loss-making German takeaway food company forecast a positive adjusted core profit margin for next year as it focuses on reaching profitability over growth.

The Berlin-based firm said in a call it should be able to drive compound annual growth rate of about 20% to 25% over many years on a gross merchandise value (GMV) basis.

The company, which did not give an outlook for GMV in 2023, expects the figure for 2022 to be at the lower end of its forecast 44.7 billion to 46.9 billion euro ($44.65 billion to $46.85 billion) range.

It forecast an adjusted core loss (EBITDA) margin of -1.4% to -1.5% of GMV, from -1.5% to -1.6% previously, while targeting an adjusted core profit margin on GMV of more than 0.5% in 2023.

Shares were up 15% at 1506 GMT, set for their best day in over seven months.

One fund manager flagged short covering as magnifying the stock price move.

A pandemic-era winner, Delivery Hero has focused on reaching long-awaited profitability as investor confidence in the fast growing but mostly unprofitable sector started to dwindle.

Chief Executive Niklas Oestberg told Reuters that Delivery Hero is evaluating exiting a couple of markets where the company might not be able to achieve profitability, without giving further details.

If the firm were to sell assets, it would not mean they would automatically lift core profit guidance for 2023, he added in an analyst call, saying there may be more investment opportunities among other reasons not to do so.

($1 = 1.0011 euros)

(Reporting by Linda Pasquini in Gdansk; additional reporting by Danilo Masoni; Editing by Clarence Fernandez, Jan Harvey, Alexander Smith and Jonathan Oatis)