Delivery service should become profitable – Östberg in an interview

Delivery Hero

Delivery Hero has taken over many companies in the past.

(Photo: imago images/Bihlmayerfotografie)

Berlin Nicholas Ostberg directs Delivery Hero been aiming to become profitable for a year. After years of growth and billions in losses, he’s slowly making progress.

The Berlin-based group, which is active in more than 70 countries, announced that the platform business with the delivery of restaurant food reached the break-even point based on operating profit (Ebitda) in the third quarter as planned. Final figures were not published, however.

Östberg told the Handelsblatt: “We are showing the market that we are also strong when it comes to profitability.” This was well received on the stock market: the share rose by six percent to more than 38 euros. At the beginning of the year, however, it was still around 100 euros.

The 42-year-old hasn’t reached his goal yet. Then Delivery Hero should also achieve a positive cash flow for the first time, i.e. earn more money than it spends in day-to-day business. It could be the second half of 2023 at the latest.

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Östberg well remembers the criticism and the doubts as to whether a food delivery service can even be able to make a profit. Being able to prove the opposite “is important and good for me personally”. After that, Delivery Hero has many options again: “We could start share buybacks, invest in new markets or take over companies.”

Östberg shares the hunt for the black numbers with competitors like that Lieferando-Owner Just Eat from the Netherlands and the British provider Deliveroo. The sector is under pressure after the Corona boom and reacted with lower investments and savings.

Tenacity as an athlete pays off

The Swede Östberg was once a member of the Swedish national youth cross-country team. He attributes part of his professional success to the experience he gained as a competitive athlete. “Sport shaped me. Cross-country skiing is painful. You learn that you can endure a lot and that you don’t give up easily.”

That also helped him as a boss. Östberg has been running the food delivery service for eleven years, which has been listed on the stock exchange since 2017. Previously, he had co-founded the pizza specialist in his home country.

In the past, Delivery Hero has taken over many companies – such as the Spanish competitor Glovo or Woowa in South Korea. Despite the macroeconomic challenges, Delivery Hero grew by 28 percent to EUR 2.5 billion from June to September.

>> Read here: Galeria Karstadt Kaufhof is also sending subsidiaries into insolvency proceedings

Östberg is also confident for next year: “We are in a very good position and will continue to grow. We will be one of the winners to emerge from the current crisis.” The food delivery business also plays a major role in future success. “In the third quarter, we grew faster than ever before,” says Östberg.

Nicholas Ostberg

“We are showing the market that we are also strong when it comes to profitability.”

However, you also have to be very large to make the offer profitable. One question is whether Delivery Hero’s competitors are making progress with their takeover plans. Delivery Hero has a stake in the Berlin food delivery service Gorillas. According to insiders, the Turkish provider Getir is currently holding takeover talks with gorillas.

Germany withdrawal was not good news

Although Delivery Hero has in Germany has its headquarters and is listed on the Frankfurt Stock Exchange, but does not conduct any business in this country. A comeback on the German market failed after just a few months last December.

>> Read also: Internal numbers from the planned gorilla deal show that the crash of the delivery services is in full swing

Östberg reluctantly remembers this time: “It wasn’t good news. People have been wondering if we’re just fickle. But we were worried about where we were going and felt the need to change that.”

The trip to Germany cost a lot of money, and market leader Lieferando was too strong. Delivery Hero is still sticking to its German headquarters. Admittedly, “it wasn’t always easy” and there are certainly better places to start a business. “But we’re happy where we are right now. So in the end everything worked.”

More: Delivery service: Aldi Süd is planning an online shop for fresh groceries.

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