Acquisitions and expansion into new markets also caused the Delivery Hero food delivery service to blush deeply in the first half of the year: in the end, the Dax group recorded a loss of over € 918 million in the first six. months, as the company announced on Thursday. This was twice less than at the same time last year, when the deficit was 448 million euros. Big losses are not uncommon for companies like Delivery Hero. Like the big Amazon, they invest heavily in growth in the first years in order to supplant the competitors and be able to profit from them later, at least that is the project.
In its current business, the online delivery service, like the entire industry, has benefited from the sharp increase in demand for food deliveries during the Corona crisis: Delivery Hero recorded 1.2 billion orders in the first semester, more than double that in the same period of the previous year. Figures for competitor Woowa, which was bought in South Korea, are not yet included. The same goes for sales, which the group was also able to more than double to 2.68 billion euros. Investors were not enthusiastic, the share was down 3.2% at the end of the Dax.
The Berlin-based company is particularly well represented in Asia, where the company has enormous growth potential. Almost half of the income is generated in local markets. In March, Delivery Hero was able to take over the Woowa delivery service in South Korea, but had to sell its own local brand Yogiyo. Delivery Hero announced the purchase at the end of 2019. At that time, the companies had agreed to a price of 3.6 billion euros. Around 1.7 billion euros are expected to be paid in cash, the rest will be paid in Delivery Hero shares.
CEO Niklas Östberg continues to focus on growth at the expense of profitability. In operational terms, Delivery Hero suffered a loss (Adjusted EBITDA) of 350.8 million euros from January to the end of June, after minus 319.8 million a year earlier. The closing of the Woowa purchase in March of this year put further pressure on the balance sheet.
In Europe, by contrast, Delivery Hero has been on the road with local brands in Northern and Eastern European countries in recent years. The group also sold all of its German activity in 2019. Since May of this year, Östberg has dared to re-enter the highly competitive German market under the Foodpanda brand. The company offers both restaurant deliveries and daily grocery deliveries. However, Delivery Hero is also grappling with new competitors such as Gorillas in this area.