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Domino's Pizza Group Plc (LON:DOM) has announced its half-year results for the 26 weeks ending 30 June 2024. Despite a slight decline in group revenue, the company demonstrated positive trading momentum in the second quarter, supported by strategic initiatives and a significant share buyback program.
Financial Highlights
Revenue and Profit
- Group Revenue: Domino's reported a 1.8% decline in group revenue. This decrease was due to lower supply chain revenue, which was partially offset by increased corporate store revenue following the acquisition of Shorecal.
- EBITDA: Underlying EBITDA rose by 0.4% to £69.0 million. Excluding a £2.3 million gain on the sale of freehold property in H1 2023, the underlying EBITDA showed a stronger increase of 3.9%.
- Profit Before Tax: Underlying profit before tax increased by 0.8% to £51.3 million, with higher interest costs being offset by lower amortisation. Statutory profit before tax stood at £59.4 million after accounting for £8.1 million in non-underlying items.
- Dividend: The interim dividend has been increased by 6.1% to 3.5p per share.
Current Trading, Outlook, and Guidance
Q2 Performance and Strategic Initiatives
Domino's saw improved trading momentum from mid-May through June and July. Q2 orders grew, bolstered by a return to growth in delivery orders after ten consecutive quarters of decline. Total orders in July were up 5.8% on a comparable basis, supported by the Euros.
Shorecal Acquisition
The acquisition of Shorecal, initially expected to have minimal impact on FY24, has been completed earlier than anticipated. With lower-than-expected investment costs, Shorecal is now projected to contribute approximately £5 million to FY24 underlying EBITDA.
Cost Management and Investment
Despite the expectation of some food cost deflation in FY24, Domino's plans to pass on a greater level of cost savings to franchise partners in H2, aiming to deliver value offers for customers and drive long-term growth. While the company expects to maintain recent momentum, the slower start to H1 and increased pass-through of food costs mean FY24 underlying EBITDA, including Shorecal's contribution, is anticipated to be towards the lower end of market expectations.
Technical Guidance for FY24
- No Benefit from Property Sales: There will be no benefit to underlying profit from property sales, unlike the £2.3 million benefit seen in H1 2023.
- Shorecal Contribution: Shorecal is expected to contribute approximately £5 million to underlying EBITDA.
- Depreciation & Amortisation: Expected to be between £18 million and £20 million.
- Interest Costs: Underlying interest costs, excluding foreign exchange movements, are projected to be between £17 million and £20 million.
- Tax Rate: The estimated underlying effective tax rate for the full year is around 24.5%.
- Capital Investment: Expected to be around £20 million.
- Net Debt: Projected to be between £250 million and £270 million by year-end.
