Domino’s Group (DOM) chief executive David Wild announced, alongside this set of half-year results, that he plans to retire, with an effective date yet to be given. The move comes at a time when the pizza company has struggled with its franchisees – new store openings have been delayed as franchisees demand a greater share of profits before proceeding with new locations. Mr Wild called the situation “complex” and that a resolution isn’t expected until sometime in 2020.
Franchisee disputes are not the only area where Domino's has struggled. The decline in pre-tax profits was due in part to the operating losses of £6.4m in the international business, which widened from a £4.1m loss over the whole of 2018, with Norway proving to be the worst affected country. The profit decline was also exacerbated by higher interest costs after net debt increased by £35.6m to £239m. By contrast, operating profit generated in the UK and Ireland improved by 7.1 per cent to £51.6m. The average discount on menu prices remained stable at 39 per cent, but the proportion of orders sold on a discount increased to 89.6 per cent, from 88.1 per cent during the same time last year.
Analysts at Numis expect pre-tax profits of £86.8m during 2019, giving EPS of 14.9p, increasing to £91.5m and 15p in 2020.
DOMINO'S PIZZA GROUP (DOM) | ||||
ORD PRICE: | 239p | MARKET VALUE: | £1.11bn | |
TOUCH: | 239-240p | 12-MONTH HIGH: | 325p | LOW: 220p |
DIVIDEND YIELD: | 4.0% | PE RATIO: | 28 | |
NET ASSET VALUE: | * | NET DEBT: | £239m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 286 | 41.7 | 7.2 | 4.05 |
2019 | 296 | 30.5 | 5.3 | 4.20 |
% change | +4 | -27 | -26 | +4 |
Ex-div: | 05 Sep | |||
Payment: | 07 Oct | |||
*Negative shareholders' equity, includes intangible assets of £103m, or 22.2p a share |