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Just Eat shares jump as Hungryhouse and early Easter boost quarterly revenues

Last updated: 09:20 01 May 2018 BST, First published: 07:28 01 May 2018 BST

Just Eat
Just Eat has been ramping up promotional spend to ward off competition

Just Eat PLC (LON:JE.) delivered a 49% jump in first quarter revenue as an earlier Easter and the acquisition of Hungryhouse boosted orders.

The online takeaway food company said revenue in the three months to March 31 rose to £177.4mln from £118.9mln a year ago as total orders increased 32% to 51.6mln.

Shares rose 4.4% to 808.4p in morning trading.

In the UK orders grew 24% to 29.7mln, supported by orders during the Easter holiday weekend and a contribution from Hungryhouse following the completion of the acquisition at the end of January.

International orders rose 46% to 21.9mln as “triple digit” growth in Canada with the SkipTheDishes online food delivery business and strong performances in Italy and Spain offset “softness” in Australia where the company took a £180mln write-down last year.

"Just Eat has had a strong start to the year. We delivered our 400 millionth order in the UK, grew well in Italy and Spain, whilst powering continued momentum in our Canadian delivery service SkipTheDishes,” said chief executive Peter Plumb.

Just Eat maintained its 2018 guidance for revenue of £600mln to £700mln and underlying earnings (EBITDA) of £165mln to £185mln.

"Just Eat reported a very strong Q1 trading update which, in our view, makes the FY revenue guidance of £660m-700m look too conservative, even at this stage," Liberum said, leaving its rating at 'buy'.

Just Eat takes on Deliveroo and Uber Eats 

In March, the company said it will increase promotional and investment spending to offset growing competition from the likes of Deliveroo and Uber Eats. 

As part of the investment, Just Eat is trialling a delivery service that uses its own staff to bring food to customers' homes from major branded restaurant chains in the UK, such as KFC and Burger King.

Previously, takeaway orders on Just Eat were delivered solely by staff at restaurants, unlike Deliveroo and Uber Eats.

READ: Just Eat slides on margin fears as marketing and investment spending climbs

The new delivery service is also being trialled in Australia where Just Eat has faced a particularly competitive market competition for its Menulog takeaway business.

Competitive Australian market 

Steve Clayton, manager of the Hargreaves Lansdown's Select UK Growth Shares fund, said Just Eat has seen "strength across the board" in the first quarter but "big questions surrounding the group remain unanswered".

"...In Australia where a revamp of Menulog was mishandled last year, progress is still below par, whilst the profitability of the group’s delivery services is yet to be proven, compared to its wildly successful Marketplace core offering," he said.

Just Eat hopes to turn around its performance in Australia after completing the re-platforming of Menulog.

However, it is a tougher market than most due to the high density of urban populations in major cities and the fierce competition already in place, according to Neil Wilson, chief market analyst at Safecap Investments Ltd. 

"Remember that Just Eat booked a statutory loss before tax of £76mln last year which was all down the £180mln provision related to the acquisition of its Australia & New Zealand businesses," Wilson said. 

"The good news is the Menulog re-platforming is complete."

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