With a new management team at the helm, Domino's Pizza (DOM) is pushing ahead with plans to overhaul its ailing German operations after the unit's losses deteriorated to £7m last year. The stores will continue to be converted into a franchise network, following the UK model, while store openings will slow to just five this year and soaring overheads will be slashed. Domino's has also agreed to buy out the minority German shareholder. Interim chief executive David Wild said the group had expanded too rapidly and warned the restructuring process would take time; losses might continue for several years.
On a brighter note, if you strip out £27.5m-worth of exceptional costs related to Germany, group pre-tax profit actually rose 1.9 per cent to £47.6m. Sales hit a record high in the UK, growing 7 per cent on a like-for-like basis, while adjusted operating profit grew 12 per cent to £50.4m. Ireland recovered, with profit 2 per cent higher at £4.5m. So far this year, UK underlying sales are tracking 15 per cent higher, sales in Ireland are up 5 per cent and trading at the franchised German stores has improved.
Numis Securities has downgraded its forecasts for 2014 by 5 per cent. It now expects adjusted pre-tax profit at £52m, giving EPS of 25.6p.
| DOMINO'S PIZZA (DOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 557p | MARKET VALUE: | £916m | |
| TOUCH: | 556-558p | 12-MONTH HIGH: | 710p | LOW: 463p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 52 | |
| NET ASSET VALUE: | 39p | NET DEBT: | 26% | |
| Year to 29 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 155 | 41.0 | 21.5 | 7.8 |
| 2010 | 188 | 45.2 | 15.4 | 10.2 |
| 2011 | 210 | 38.8 | 16.7 | 12.3 |
| 2012 | 241 | 42.4 | 19.0 | 14.5 |
| 2013 | 269 | 21.6 | 10.7 | 15.9 |
| % change | +12 | -49 | -44 | +10 |
Ex-div: 12 Mar Payment: 4 Apr | ||||
