Domino’s full year results boosted by Japan acquisition

Posted by AFN Staff Writers on 13th August 2014
Domino’s full year results boosted by Japan acquisition
Domino’s full year results boosted by Japan acquisition

Australian-listed food group Domino’s Pizza Enterprises Limited (Domino’s) has announced an Underlying Net Profit After Tax of $45.8m, an increase of 50.4 per cent on the previous year, with the Company’s expansion in Japan proving profitable.

In the first full year results reported since the 75 per cent shareholding acquisition in Domino’s Pizza Japan (DPJ), Domino’s has reported an impressive Underlying EBITDA of $95.1 million, a 70 per cent increase from the corresponding period last year, of which Japan has contributed an Underlying EBITDA of $27.4 million.

Domino’s said strong trading results in Australia and New Zealand, structural changes gaining momentum in Europe, as well as Japan’s store relocation strategy and television advertising had also contributed to the impressive results.

The Group achieved Same Store Sales growth of 5.8 per cent, which included strong Same Store Sales in ANZ 6.3 per cent and significantly improved Same Store Sales in the second half of the 2014 financial year in Europe 4.6 per cent despite a VAT increase. Domino’s also reported strong Same Store Sales growth in Japan for the period under DPE ownership 10.7 per cent.

Strong store growth and ‘continued digital innovation’

Domino’s said it had added a record number of new stores across the Group including 44 new stores in Australia and New Zealand, 27 to the European network and 61 new stores added in the full financial year for Japan.

Domino’s Group CEO and Managing Director, Don Meij said the Company had been busy opening new stores and enhancing their “Entice‟ store design with a range of new design palettes to suit any location.

“The evolution of “Entice‟ is an authentic, raw and fresh design with stripped-back clean lines. This design is already being rolled out in the Australian and New Zealand markets,” Mr Meij said.

In addition to the focus on store design and organic store growth, the Company has launched a number of digital platforms including the Offers App, Pizza Chef and digital wallet options (commencing with PayPal) in Australia and New Zealand.

Mr Meij said the business had worked hard to position itself with a clear digital advantage in its marketing and social strategies.

“During the past 12 months in particular, we have invested in our electronic commerce capabilities to ensure we remain relevant to our customers’ changing preferences,” Mr Meij said.

Mr Meij said this strategy had seen Domino’s reach record online sales in a number of markets.

“We continue to invest in this area and have successfully implemented our global point-of-sale and online ordering systems from Australia into The Netherlands as a first step to updating all of the Company’s European territories,” Mr Meij said.

Product quality and innovation

Domino’s reported that product innovation, coupled with strong promotional campaign execution in all six markets, has also contributed to this year’s profit result.

Product highlights included the Summer Prawn and Peri Peri Ranges and popular desserts to the menu in Australia and New Zealand; the successful introduction of a Cheese stuffed crust in both The Netherlands and France; the Chicken Tandoori pizza in Belgium and the new Seafood pizza and Quattro Cheese ‘n’ Roll in Japan.

“Increasing our investment in national advertising, including television campaigns, to promote these exciting product launches has been a big driver of increased sales, particularly in Europe and Japan,” Mr Meij said.

Outlook for FY15

If the first five weeks of results are an indication, Domino’s is set to continue the momentum with double digit Same Store Sales growth of 14.8 per cent already recorded in Europe compared to Same Store Sales of -5.0 per cent at the same time last year. Australia and New Zealand have recorded solid Same Store Sales of 10.3 per cent compared to 4.7 per cent for the corresponding time last year and Japan reported Same Store Sales of 6.9 per cent. The Company has also already opened 14 new stores in the Group.

“We are confident of continuing the current strong momentum to deliver EBITDA growth in the region of 20 per cent and add approximately 175-185 new stores to the Group,” Mr Meij said. “These numbers include the biggest pipeline of new stores we have had in Europe, giving us confidence across all three countries,” he said.

Domino’s said the results meant it would pay shareholders a final fully-franked dividend of 19 cents per share, in addition to the interim dividend of 17.7 cents per share. This brings the full year dividend to 36.7 cents per share, an 18.8 per cent increase over the prior year.

The final dividend will be paid on Friday 12 September 2014 with a record date of Tuesday 26 August.