These are the maiden full-year numbers from DP Eurasia (DPEU), the master franchisee of Domino's Pizza in Turkey, Russia, Azerbaijan and Georgia. The numbers didn’t divert significantly from the January trading statement – which already revealed a 33 per cent rise in system sales and strong like-for-like growth in Turkey and Russia – but cash profit of ₺97m (£17.6m) did fall slightly short of some analysts’ expectations.
Lower net income, higher marketing costs and a surge in capital expenditure contributed to this minor miss, although one shouldn’t dismiss the clear growth in margins across Turkey and Russia. Cash profit margins expanded by 50 basis points in Turkey to 13.1 per cent and 200 basis points to 6.1 per cent in Russia. Company bosses say the Russian market is less mature – hence the faster growth rates – but margins should converge with Turkey over the medium term. These dynamics also show up in systems sales growth rates: 37.7 per cent in Turkey on a like-for-like basis, and 78.5 per cent in Russia.
Analysts at Peel Hunt still expect pre-tax profit of ₺60.5m in 2018, giving EPS of 32.4 kuruş, moving up to ₺87.4m and 48 kuruş in 2019.
DP EURASIA (DPEU) | ||||
ORD PRICE: | 219p | MARKET VALUE: | £318m | |
TOUCH: | 216-219p | 12-MONTH HIGH: | 250p | LOW: 155p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 106 kuruş* | NET DEBT: | 98% |
31 Dec | (₺m) | profit (₺m) | per share (₺) | per share (kuruş) |
Year to 31 Dec | Turnover (₺m) | Pre-tax profit (₺m) | Earnings per share (₺) | Dividend per share (kuruş) |
2014** | 319 | -14.1 | -3.5 | na |
2015** | 375 | -18.5 | -5.1 | na |
2016 | 451 | 38.3 | 6.5 | nil |
2017 | 633 | 6.8 | 0.1 | nil |
% change | +40 | -82 | -99 | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of ₺84.5m (Turkish lira) or 58 kuruş per share. **Pre-IPO information. £1=₺5.54 |