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Prosus Reports 66% Fall in iFood’s Core Restaurant Business Profits

Cape Town-based investment firm Prosus disclosed that Brazil’s delivery leader iFood’s core business had a trading profit of $10 million during fiscal year 2022

A worker picks up food from a restaurant to make an iFood app delivery in Sao Paulo, Brazil, on Wednesday, April 1, 2020.
June 27, 2022 | 03:56 pm

Bloomberg Línea — Brazil’s delivery company iFood, majority-owned by Prosus, grew GMV (Gross Merchandise Value) by 41% and revenue by 29%, for the financial year ended 31 March 2022. The South African investment firm reported that iFood’s core restaurant business delivered a trading profit of $10 million, a decline of 66% against the $30 million reported last year.

Besides iFood, Prosus, which is part of the Naspers group, has stakes in other LatAm startups such as 99minutos, Creditas, and Facily.

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Prosus reported that iFood’s core delivery business returned to profitability in the past two years. “iFood’s restaurant delivery business is profitable in Brazil, following continued efficiencies of scale and operational execution,” said Prosus, in its earnings report.

Only in March this year, iFood delivered 68 million orders in Brazil. Uber CEO Dara Khosrowshahi told Bloomberg Línea in early June that Uber Eats quit Brazil amid inability to be the number one player in the country. “There is no point staying in a market if you cannot be the leader,” he said.

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iFood’s total revenues grew to $991 million due to expansion to other cities in Brazil, while trading losses increased to $206 million driven by grocery delivery investments.

“The significant overlap between the customers of restaurant delivery and grocery delivery, and the operational synergies across the two businesses, make grocery delivery a natural fit for the iFood ecosystem. iFood’s grocery business has quickly become an important player in Brazil’s significant grocery industry, which is estimated to have sales of $55 billion in 2022 according to Euromonitor,” said Prosus.

Liquidity to employees

Prosus reported that iFood changed its settlement policy of the share option schemes. In June 2021, the Naspers and iFood Holdings boards approved a prospective change in the settlement of these options by providing liquidity to employees who will be settled in cash going forward.

The share-based payment liability was $302.1 million, according to the group, and the share-based payment reserve related to this scheme was $16.3 million.

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“The change in the settlement is accounted for as a modification, with the difference between the existing share-based reserve and the share-based liability of $285.9 million being recognized through retained earnings in equity. Following this change, the iFood scheme is accounted for in terms of the group’s accounting policy as cash-settled share-based payments.”

Prosus and Naspers also announced the start of an open-ended share repurchase program with the selling of small numbers of Tencent shares to “unlock immediate value for shareholders”.

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