×

UPDATE 1-Britain's Just Eat to up spending in 2018, hitting core earnings

(Adds details, reaction)

LONDON, March 6 (Reuters) - British takeaway delivery company Just Eat said it would invest an additional 50 million pounds ($69 million) in 2018 to stay ahead of well-funded rivals, meaning core earnings could come in below forecasts by as much as 60 million pounds.

The group, which has grown rapidly in recent years to enter the FTSE 100, was setting out its plans under new chief executive Peter Plumb. For 2018 it forecast underlying core earnings of between 165 million to 185 million pounds for 2018. The market had expected a figure of 226 million pounds.

"We expect these investments to improve overall group performance over the medium- to long-term, helping us to capture clear opportunities and insulate the business from fast-moving and well-capitalised competitors," it said.

Just Eat, which competes with Deliveroo and Uber Eats, said the investment would help to grow its delivery capabilities in Britain, Canada, Australia and New Zealand, and into developing markets.

Just Eat also reported 2017 revenue and core earnings above its guidance but took a non-cash impairment charge of 180 million pounds against its Australian and New Zealand operations.

Analysts at Berenberg said an investment drive by a new chief executive was not that surprising, but said the level of increased spending was.

"Unless Mr Plumb can do a good job at the investor presentation in explaining what exactly these new investments will be spent on, and how this will increase medium-term consensus expectations ... we expect shares could react negatively to this announcement," they said.

Shares in Just Eat are up 71 percent in the last year.

($1 = 0.7231 pounds) (Reporting by Paul Sandle; editing by Kate Holton)