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Domino’s Pizza’s Statutory Net Profit After Tax Declined In 1H FY19

  • February 20, 2019 09:18 PM AEDT
  • Team Kalkine
Domino’s Pizza’s Statutory Net Profit After Tax Declined In 1H FY19

Domino’s Pizza statutory Net Profit After Tax (NPAT) declined by 9.1% to $53.3 million for the first half of Fiscal 2019 compared to the previous corresponding period. The bleak profit driven by one-off costs in H1FY19 sent DMP to hit by bearish market trends as the stock price slipped by 3.05% to last trade at $44.500 on 20 February 2019.

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The total non-recurring costs of $25.7 million took a toll on company’s statutory results for the half year ended 31st December 2018 as its statutory NPAT declined by $5.4 million and statutory EPS stood at 62.4 cps, down 6.2% on 66.5 cps in 1H FY18. This reflects the one-off costs associated to the professional fees, legal and settlements that Domino’s spent for protecting its own operational IP across Australia and New Zealand region. However, the major chunk of non-recurring costs was associated with the acquisition of Hallo Pizza, its Germany conversion and integration as well as France conversion of Pizza Sprint stores.Â

However, Domino’s Pizza Enterprises Limited’s (ASX: DMP) underlying results have shown significant growth in company’s operation with Network Sales up by 14.6%, revenue by 23.7%, EBIT by 12.1% and NPAT by 8.4% for H1 FY19 compared to H1 FY18. The solid underlying performance of the company demonstrates massive growth in its online sales primarily driven by Hallo Pizzas acquisition in Europe. This translates an increase of 16.5% to $934.3 million of online sales in 1H FY19, +$132.2 million higher than the prior corresponding period.

While Domino’s has outgrown other QSR businesses, management had expectations to be better, with performance falling short of internal targets. The new management initiatives in Japan have materially grown unit economics and trading performance throughout the half year with EBITDA growing at 34.3% on the prior corresponding period.

Also, the company has posted strong underlying cash flows which were up 26.2% with substantial cash conversion rate and repayment of store loans by franchisees in Japan. The new management initiatives in Japan have materially grown unit economics and trading performance throughout the half year with EBITDA growing at 34.3% on the prior corresponding period.

Europe and Japan accounted for more than 70% of its revenue and more than half of its EBITDA. Its global network sales growth was +3.3% higher on a Same Store Sales basis, reflecting strong performances from Japan, Germany, Benelux3 and New Zealand, with softer performance in Australia, and lower than expected performance in France.

Domino’s reached significant store milestones in the Half Year, surpassing 1,000 Domino’s branded stores in Europe, 700 stores in Australia and 300 Domino’s branded stores in Germany, opening 77 organic new stores and converting 72 Hallo Pizza stores. Moreover, during the first seven weeks of H2 FY19, the company opened 13 more new organic stores with same-store sales growth of +4.0%.

The Board declared an interim dividend of 62.7 cps, up 7.9% on 1H FY18, payable on 14 March 2019 with the record date of 27 February 2019.


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