11th Sep 2018 13:02
LONDON (Alliance News) - DP Eurasia NV on Tuesday reported a widened interim loss on increased costs and expenses despite sales growing on 79 new store openings and improved online platforms.
The Domino's Pizza master franchisee in Turkey, Russia, Azerbaijan and Georgia reported a pretax loss of TRY10.0 million - equivalent to around GBP1.2 million - from TRY300,000, or around GBP35,500, a year before.
In the six months ended June, revenue increased 32% to TRY380.2 million from TRY287.7 million. Total sales increased 28% to TRY510.4 million from TRY398.5 million.
The pizza chain, however, reported a sharp increase in the cost of sales to TRY251.8 million, up 36% from TRY184.7 million.
Increased costs and expenses in the period were the primary reason for the pizza seller's widened loss.
General administrative expenses increased 43% to TRY63.0 million from TRY44.2 million and Marketing & Selling Expenses increased 21% to TRY50.0 million from TRY41.3 million.
The company also booked a larger foreign exchange loss, to TRY8.6 million from TRY7.3 million, and increased financial expenses to TRY16.8 million from TRY10.0 million.
The increased costs were mainly due to higher borrowing costs in Turkey, however the company refinanced its debt in July, moving the majority of its debt to Russian rubles, making it "less susceptible" to Turkish interest fluctuations.
Investments in online ordering platforms, store conversions, GPS tracker hardware installations and a new Moscow headquarters were the "main elements" of the company's increased expenditure.
DP Eurasia increased its total number of stores in the period to 672 from 593. The company said, however, its online sales growth of 65% was the "main driver" of overall growth.
Total adjusted earnings before interest, tax, depreciation and amortisation - which excludes income and expenses - increased 7.2% to TRY40.3 million from TRY37.3 million.
Earnings were impacted by increased by increased corporate expenses of TRY3.5 million, up from TRY100,000 the year before, and planned corporate and franchise operation recruitment in Russia, in preparation for expected growth.
Year-on-year adjusted earnings increased 12% in Turkey to TRY36.5 million and 49% in Russia to TRY7.4 million.
Turkey's online sales increased 47% and Russia's online sales more than doubled. Total online sales now account for 59% of overall sales in DP Eurasia's two biggest markets, up from 50% the year before.
Like-for-like total sales increased 11% in Turkey and 18% in Russia. The company said its "revamped apps" contributed significantly to the increase.
Looking ahead, the company said it is offsetting the "economic volatility" in Turkey by increasing prices more frequently, without seeing any "discernible negative impact" on volumes.
The "uncertain" short term outlook does not worry the company as it has "come through stronger" in previous "difficult macroeconomic environments" in Turkey.
Chief Executive Officer Aslan Saranga said: "It gives me great pleasure to announce another strong set of results for the first half of 2018, during which we have grown our top-line as well as adjusted ebitda in both Turkey and Russia.
"We have added 29 stores to our store count in the first half of the year and we are moving towards reaching the 700th store milestone later in 2018."
Shares in DP Eurasia were up 5.3% at 89.50 pence each on Tuesday.
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