Domino's Pizza profits below guidance as weak international growth bites
Source - SMW
Domino's Pizza reported Tuesday underlying pre-tax profit was a little below its expectations as weaker international sales hurt overall performance. For the 12 months ended 31 December, profit before tax fell 1.1% to £93.4m and reported group system sales rose 9% to £1.26bn. Previous guidance in January had suggested underlying pre-tax profits would land at lower end of the range between £93.9m and £98.2m. Reported pre-tax profits were down 24% from a year earlier as asset wrote downs of £31.5m relating mainly to International impairments, UK supply chain transformation and integration costs weighed. The pizza chain attributed the weakness in international 'growing pains,' which resulted in a worse financial result than anticipated. Compared to the equivalent 52 weeks of 2017, UK system sales were up 7.1% to £1,091.6m. Like-for-like growth, excluding the effect of splitting territories, was 4.6%. The Republic of Ireland system grew sales 5.2%, and like-for-like sales 4.0% from a year earlier.
In its international segment, Switzerland, Norway and Sweden all continued to be loss-making.
The dividend was raised to 9.5p, up 5.6% from a year earlier.
Looking ahead, the company said it expected further growth in the UK and ROI in 2019, both from like-for-like growth and new store openings.
In its international businesses the company anticipated a break-even result for International in 2019.
Overall group capex is expected to be £25-30m.
'2018 was a mixed year. In the UK and Ireland, which account for around 90% of the business, we extended our excellent track record of growth and cash generation, responding well to the very challenging environment for the casual dining market,' said David Wild, Chief Executive Office.
'Our franchisees opened 59 new stores, creating more than 2,000 jobs and sold a record 102 million pizzas. We also continued investing for future growth in digital and by successfully completing our new Supply Chain Centre in Warrington, our most significant investment to date, which supports our target of 1,600 stores in the UK.'
'Internationally, we have experienced some growing pains which have hampered our overall financial performance. These are all good markets, with more than 100 million population, good appetites for pizza and little, if any, global brand competition. This is why we have strengthened our management teams and are committing disciplined capital to support future development. We expect an improved performance from International, with the business targeted to break even this year.'