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Just Eat says CEO to step down as it raises 2018 guidance and expects growth in 2019

Just Eat expects 2019 revenue and earnings to grow on the back of improved margins and its Canadian business, SkipTheDishes, deliver its first full year profit
Just Eat
Just Eat has been heavily investing in its delivery service

Just Eat PLC (LON:JE. said chief executive Peter Plumb is stepping down as the online takeaway group raised its 2018 guidance following efforts to fend off growing competition from Deliveroo and Uber Eats.  

Plumb, who has been chief executive of Just Eat since July 2017, has come under pressure from shareholders to improve returns after a disappointing year for the company’s shares that saw it fall out of the FTSE 100 in December.  

READ: US activist investors slams Just Eat for 'significant underperformance'

Just Eat has appointed chief customer officer, Peter Duffy, as interim chief executive while it searches for a replacement of Plumb.

Plumb said: "2018 was another year of strong growth for the group. The business is in good health, and now is the right time for me to step aside and make way for a new leader for the next exciting wave of growth."

Just Eat lifts 2018 guidance

Alongside the announcement, the group said it now expects revenue of £780mln and underlying earnings (EBITDA) of £172mln to £174mln for 2018.

In the company’s last trading update, published in November, it had said it expects revenue to be towards the top end of its £740mln to £770mln guidance range and underlying EBITDA to be towards the lower end of the £165mln to £185mln range, mainly due to investments in Latin American markets and its restructuring plan.

READ: Just Eat’s investment in its delivery fleet expected to dent full-year profits

Just Eat has been heavily investing in building its own network of drivers and cyclists as it looks to head off the rising threat posed by Uber Eats and Deliveroo, both of which offer a delivery service.

The firm has also added new restaurants to its marketplace, such as Gourmet Burger Kitchen, KFC and Subway.

Just Eat said 2018 has been “transformational” for the business and believes it is “strongly positioned” to take advantage of the £83bn market opportunity in takeaway food delivery this year and it accelerates delivery initiatives, particularly in the UK and Australia.  

2019 revenue and earnings expected to grow 

It expects 2019 revenue of £1bn to £1.1bn and underlying EBITDA in the range of £185mln to £205mln as it estimates margin growth and the Canadian business, SkipTheDishes, to deliver its first full year profit.

The estimates exclude the Latin American arm, iFood, which includes operations in Mexico and Brazil and is expected to report an EBITDA loss in the range of £80mln to £100mln as it invests in improving the business.  

In morning trading, shares edged up 0.7% to 663p. 

Just Eat a possible takeover target, says Liberum

Liberum said Just Eat's announcement today makes a sale of certain assets or possibly the whole company more likely.

The broker believes the deconsolidation of iFood from Just Eat's estimates will raise hopes the company will sell its stake to a strategic buyer, who would focus on market potential rather than losses.

"There has to be the possibility that Just Eat will now become a target for buyers," Liberum added.

"There has been recent activity in the space with buying the German operations of Delivery Hero and there may be hope that Just Eat may proactively sell parts of its business or that strategic buyers may look to take advantage of the changes to make a bid for Just Eat."

Liberum also thinks the outlook on EBITDA is "slightly more nuanced".

"While it looks like EBITDA is in line with consensus, a counter-argument is that Just Eat is now not including its stake in iFood, which is now projected to make EBITDA losses of £80-100m for 2019E," the broker said. 

"However, our previous forecasts had assumed that iFood would make a profit so, on a like for like basis, it looks like the 'core' operations i.e. ex-Mexico and Brazil are seeing an upgrade, at least to our estimates."

Liberum reiterated a 'buy' rating and target price of 1250p on the stock.

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