Domino’s Pizza Enterprises Limited (ASX: DMP)- DMP shares tumble on profit miss

Domino’s Pizza Enterprises Limited - Kalkine Media

Domino’s Pizza posted their biggest loss for the year as DMP shares fell more than 6.5% as at 14 August 2018 after the fast food franchisor missed profit guidance in 2018 and earnings guidance for FY19 fell short of anticipated.

As per the FY18 results announcement made earlier today, Domino’s Pizza reported 15% increase in adjusted net profit to $136.2 million, thus, resulting the profit to land below the consensus forecast of 20% growth in NPAT. This gap between FY18 profit guidance and FY18 actual results reported the company’s failure to achieve the targeted same-store sales growth and addition of new stores in Australia, New Zealand and Europe. Although the group acquired the chain of 163 stores of Hallo Pizza in Germany, it missed FY18 guidance of opening 170 new inorganic stores and overall store growth of 310 to 330 stores, thus reporting to 308 of total new stores.

In comparison to FY17, the statutory profit of the company edged up by 18.1% to $121.5 million over the past 12 months, which includes one-off cost of $11.7 million associated with professional fees, acquisition, conversion and integration of Germany’s Hallo Pizza, conversion of pizza sprint stores, and transaction cost on Japan MI purchase.

However, prior to acquisition of Hallo Pizza in second half of FY18 and Japan MI purchase in first half of FY18, free cash flow of the company rose up 125.8% for the year to $120.6 million.

Earnings before interest and tax shot up by 10.9% to $205.9 million as company’s revenue increased by $80.8 million to $1.15 billion in fiscal year 2018.

As company’s earnings per share rose to 152.8 cents from 133.6 cents in FY17, the board declared final dividend of 49.7 cents, to the total dividend of 107.8 cents, up by 15.5%, franked to 75%.

The board has targeted $227 million to $247 million of earnings before interest and tax with same store sales growth of 3-6% and +225-250 of new organic stores opening. But this earnings guidance for financial year 2019 fell short of anticipations made by market experts.

On the back of FY18 profit guidance miss, DMP shares plunged to $49.00 on 14 August 2018 (4:30 PM AEST), recovering from 8% decline seen during early trade.

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