7th Aug 2018 09:06
LONDON (Alliance News) - Domino's Pizza Group PLC said Monday revenue climbed 23% in the first half of the year, helped by a good international performance, but costs associated with that international arm helped send pretax profit down 9.7%.
Shares were trading down 9.9% at 286.50p each, making the company, which operates UK and European franchises of the US's Domino's Pizza Inc, the worst performer in the FTSE 250 index.
For the six months to July 1, Domino's Pizza posted revenue up to GBP259.1 million from GBP211.3 million year-on-year.
Revenue in the UK & ROI, the pizza delivery company's core market, increased by 13% to GBP212.4 million, while the Domino's international business saw revenue jump by 96% to GBP46.7 million from GBP23.8 million.
Pretax profit fell to GBP41.7 from GBP46.2 reported a year ago as high wages in Norway hiked administrative costs to GBP52.7 million from GBP30.6 million year-on-year.
On an adjusted basis, pretax profit increased 2.5% to GBP45.7 million from GBP44.6 million. The adjusted profit stripped out net non-underlying costs of GBP4.0 million, which included GBP2.1 million for converting the company's recent acquisition in Norway and GBP1.9 million from UK supply chain restructuring.
Domino's total sales were up 13% to GBP616.6 million from GBP546.5 million year-on-year, with UK & ROI sales increased by 8.1% to GBP565.1 million from GBP522.7 million. On a like-for-like basis UK sales increased by 5.9%.
In the UK, Domino's said that the trading environment "continues to be uncertain". The chain opened 22 new stores in the first-half taking the total number to 1,067. Domino's said it expects to open 60 more stores in the UK in 2018.
In other markets, total sales from the company's international operations more than doubled year-on-year at GBP51.5 million.
Norway continued to lead the growth with sales multiplied. Sweden followed with a sales increase by 56% while Switzerland and Iceland were up 13% and 5.5% respectively.
The company's international business recorded an adjusted operating loss of GBP1.8 million, with growing underlying profits in Iceland and Germany offset by losses in Switzerland, Norway and Sweden, Domino's said.
Domino's explained: "Whilst our international businesses continue to make good progress with customers and sales, it has taken us some time to refine the operating model and cost base at store level, particularly in Norway.
"We are confident that the changes we have made will result in a better performance in the second half, and believe that these businesses offer significant long term growth potential as we export our expertise in digital, supply chain and franchisee management."
The company lifted its interim dividend by 8.0% to 4.05 pence per share from 3.75p year-on-year.
Looking ahead, Domino's said it expects adjusted profit for 2018 to be in line with market expectations, which see it in the range of GBP95.9 million to GBP101.4 million.
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