Domino’s Pizza Enterprises (DMP) has lifted dividend and upped its 2014 earnings growth forecasts as the company’s expansion into Japan late last year boosted sales and profits.
At the same time the company revealed ambitious plans to boost total store numbers by more than 50% within five years to satisfy apparently insatiable demand for pizza.
The company said underlying net profit grew 38.8% to $20.2 million for the six months ending December, slightly under market hopes for a figure of just over $21 million.
The miss didn’t hurt the company in the eyes of investors who chased the shares all day pushing them up by more than 12% to an all time high of $19.29 at the close.
Total sales surged 40% to $576.2 million as 60 new stores in Australia, New Zealand and Japan added to the strong 4.6% rise in same store sales in the half year.
Underlying earnings before interest and tax rose 56.5% to $31.6 million.
Much of the improvement came from the boost of the company’s $100 million expansion in Japan in the September quarter which saw the company buy a 75% stake in Domino Pizza Japan, which supplied 259 stores pizza delivery outlets, most of them company owned. It has grown from the Number 3 pizza delivery group to the second biggest in the past few months, the company said yesterday.
One off costs of around $2.7 million were down on a year earlier and that helped the bottom line to jump 29% to $18.6 million.
The company will pay shareholders an interim fully franked dividend of 17.7c a share, up 14.2% on a year earlier. It’s payable on March 11.
DMP 1Y – Domino’s delivers strongly
The company said it plans to open a further 70 stores in Australia, New Zealand and Japan in the current half year, taking total store numbers this year to about 1360.
After reviewing market opportunities in Australia and Japan, Domino’s has upgraded long-term store targets and now expects to have 2000 stores by 2019 and 2750 by 2025.
“That new store pipeline is not only assisting this year’s earnings, it flows into next year, setting us up for a good year,” said chief executive Don Meij.
"Much of the improvement came from the boost of the company’s $100 million expansion in Japan in the September quarter which saw the company buy a 75% stake in Domino Pizza Japan, which supplied 259 stores pizza delivery outlets, most of them company owned," Mr Meiji said in yesterday’s release.
Almost 60% of total sales are now coming from online in Australia and more than half of those orders are from mobile devices. It was around 50% in the June full year.
And that improving online and mobile performance is the key takeaway from the result. Like REA Group, Carsales.com, Webjet, Wotif, Seek and a few others, Domino’s is now firmly in the online world, especially mobile.
