German online takeaway food company Delivery Hero (DHER.DE) recently announced their forecast for the single-digit percentage growth in the gross merchandise value (GMV) for the year 2023. The company is anticipating this growth despite a challenging comparison period after parts of Asia reopened from lockdowns.
According to the Berlin-based firm, they expect their GMV to grow between 5% and 7% in constant currency terms this year. They attribute this expected growth to the “promising start” of the second quarter and anticipate the growth to accelerate throughout the year.
After experiencing a pandemic-driven boost to growth, Delivery Hero has shifted its focus towards achieving long-awaited profitability. Investor confidence in the rapidly expanding but mostly unprofitable sector started to wane, pushing the company to drive profitability by expanding its customer base and expanding its business beyond food delivery services.
Finance chief Emmanuel Thomassin told Reuters that Delivery Hero is not concentrating on cutting costs, but rather is more focused on improving their gross profit. The company aims to do this by expanding their business beyond food delivery services and growing their customer base.
In the first quarter, Delivery Hero’s GMV grew by an average of 16% in all regions except Asia, which includes its core market of South Korea. The company experienced a decline in GMV by 7% in Asia, which was affected by “difficult” comparables from last year when strict COVID lockdowns were still enforced.
Delivery Hero’s shares were down 3.7% at 0823 GMT, leading to some analysts to predict that this volatile equity could experience weakness in these volatile times. Despite this, the company is still optimistic about its future growth prospects. Delivery Hero expects to record double-digit growth in Asia by the end of 2023.
Thomassin stated that the company is “increasing profitability in every single market where we were profitable last year.” He also added that the growth in Asia would stay below that of other regions.
In the first quarter, the company reported a GMV of 11.2 billion euros ($12.39 billion), which was up 2.1% on a constant currency basis and in line with analysts’ consensus estimate. The company confirmed its full-year outlook for a core profit (EBITDA) to GMV margin exceeding 0.5%.
Overall, despite the challenges faced by the food delivery industry during the pandemic, Delivery Hero is optimistic about its growth prospects in the years to come.