Grab sees no big layoffs despite market weakness

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Grab sees no big layoffs despite market weakness
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By Reuters 25 Sep 2022, 09:53 STI (Update)

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Grab reorganized its fintech unit this year to focus on more lucrative areas and Reuters announced the departure of some senior executives.

Grab, Southeast Asia’s largest ride-hailing and food delivery company, isn’t planning massive layoffs like some rivals have, and is hiring selectively while moderating its ambitions in financial services.

Chief operating officer Alex Hungate said that at the start of the year, Grab was worried about a global recession and was “very careful and judgmental about any hiring”, and therefore he did not hadn’t gotten to the “desperate” point of a hire. freezing or massive layoffs.

“Around the middle of the year we did a specific kind of reorganization, but I know other companies did massive layoffs, so we don’t see ourselves in that category,” said Hungate, 56. years, to Reuters during his first interview since arriving in Singapore. based at Grab Holdings Ltd in January.

The company was hiring for positions in data science, mapping technology and other specialized fields, although each hire is a much bigger decision than it was before, he said.

“You want to make sure we’re preserving capital. The hiring hurdle has definitely been lifted.”

Grab, a ten-year-old household name in Southeast Asia, had around 8,800 employees at the end of 2021. Like its rivals, it has benefited from a boom in food services during the COVID-19 pandemic. 19, while carpooling suffered.

As economies open up, demand for food delivery is declining while ridesharing has yet to fully recover. Tech valuations also fell dramatically and inflation, slowing growth and rising interest rates emerged as risks.

In recent weeks, Southeast Asia’s largest e-commerce company, Shopee, has cut jobs in various countries and closed some overseas operations after parent company Sea reported mounting losses and abandoned its annual e-commerce forecast.

Hungate, a veteran of the financial services, logistics and food sectors, has spearheaded the move away from low-margin businesses as Grab races to become profitable.

The second-quarter loss narrowed to $572 million from $801 million a year earlier. But last month it cut its outlook for gross merchandise volume for the year, blaming a strong dollar and a drop in demand for food delivery.

Last month, Grab said it was closing dozens of so-called dark stores — distribution centers for on-demand groceries and slowing the rollout of its centralized “cloud kitchen” facilities for deliveries.

“The other area where we’ve really tightened our strategic intent is in financial services, where we were growing payments, wallets and non-bank financial lending off-platform and on our platform quite significantly,” Hungate said.

Grab reorganized its fintech unit this year to focus on more lucrative areas and Reuters announced the departure of some senior executives.

“HIGHER MARGINS”

Grab is now primarily focused on selling its loan and insurance products on its platform to merchants and drivers who often repay from their income streams on the platform.

“As we make this change, the business mix will evolve towards higher margins,” Hungate said.

Grab, which operates in 480 cities in eight countries, has more than five million registered drivers and more than two million merchants on its platform.

It caught global attention in 2018 when it acquired Uber’s Southeast Asia business after a costly five-year battle.

Grab is betting on the growth of financial services by offering banking and other products with its partner Singapore Telecommunications in key markets.

It listed on Nasdaq in December after a record $40 billion merger with a blank check company.

Hungate said it was “a good time” for the company to review how it spends money, given increased financial scrutiny and the need to respond to shareholders.

“Maybe we were lucky in that the discipline of being a public company came at the right time,” he said, adding that Grab’s $7.7 billion in cash meant it was one of the best capitalized players in the industry in Southeast Asia.

Grab’s shares have fallen about 60% this year to give it a market value of $10.6 billion.

Reuters reported last month that Grab’s Indonesian rival GoTo was seeking to raise around $1 billion through a convertible bond offering.

Hungate said Grab would provide details on its progress toward profitability and other metrics on its first Investor Day on Tuesday.

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