Delivery Hero upbeat on revenues, decided against Wolt offer

FILE PHOTO: Delivery Hero's logo is pictured at its headquarters in Berlin
FILE PHOTO: Delivery Hero's logo is pictured at its headquarters in Berlin, Germany, August 18, 2020. REUTERS/Fabrizio Bensch

November 11, 2021

By Linda Pasquini and Milla Nissi

(Reuters) -Delivery Hero on Thursday nudged its 2021 revenue outlook up towards the upper end of its previous forecast, as the online takeaway food company benefits from its ongoing investments in food delivery and so-called quick commerce.

The German group has grown rapidly during the coronavirus crisis and has invested heavily in highly competitive quick commerce, which aims to deliver goods in as little as 10 to 15 minutes.

The boom in home delivery demand during the pandemic has attracted more companies into the business, which is already starting to spur a consolidation wave.

U.S. rival DoorDash this week said it would buy Finland-based Wolt in a acquisition valued at about 7 billion euros.

Delivery Hero CEO Niklas Oestberg said the group had also been involved in the process leading up to the deal, but had decided against making an offer.

Oestberg said the deal would not have a material impact on Delivery Hero, as the company’s European operations are “relatively small”, under 7% of its business.

Delivery Hero now expects to report 2021 revenue and gross merchandise volume at the upper end of its earlier forecast ranges, as it stepped up the number of Dmarts – centrally located dedicated warehouses that cater only to online clients – to 861 from 704 at the end of June. ,

“The growth in the number of Dmarts is impressive and a statement of intent around the sector’s hottest theme,” a Jefferies analyst said.

Delivery Hero shares were up 2.6% at 0934 GMT, topping the German blue-chip index.

DOORDASH-WOLT DEAL

Oestberg noted the DoorDash deal with Wolt could affect some other European players, pointing to the price tag as a sign that other U.S.-based groups may expand into the market.

“We looked into the numbers but we decided not to participate in an offer, as we understood that the price expectation was way beyond what we could actually pay,” Oestberg said.

“We’ve been trying to focus on being number one in our markets,” he said, adding that Wolt would not materially change the story.

Delivery Hero decided earlier this year to relaunch operations in Germany, stepping up competition in the home market it quit three years ago to focus on Asia, which makes up about 50% of revenues.

($1 = 0.8648 euros)

(Reporting by Linda Pasquini, Milla Nissi in Gdansk. Editing by Jane Merriman)