Domino's shares suffer despite positive half-year announcement

Domino's shares suffer despite positive half-year announcement

Shares in Domino's Pizza (ASX: DMP) are down 9 per cent despite half-year results showing a lift in group profits.

Domino's has lifted its first-half net profit by 17.3 per cent to $58.7 million, while revenue for the six months to December 31 has risen 5.2 per cent to $567.6 million.

The company says sales in Australia and New Zealand increased 5.9 per cent during the first five weeks' trade in the second half.

The company also reaffirmed guidance for a full-year net profit to grow about 20 per cent.

Domino's slashed full-year same-store sales guidance for Australia and New Zealand by six to eight per cent, however group CEO Don Meij (pictured) says an expanded store network coupled with focus on store improvement will deliver stronger growth in the second half.

"Our goal is to give existing and new customers more of what they want; menu options, cooking times and a simplified ordering experience that exceeds expectations and the response from our customers demonstrates the importance of this approach," says Meij.

The company will pay shareholders an interim dividend of 58.1 cents, up 20 per cent on the interim dividend paid last half-year.

Domino's ANZ CEO Nick Knight says the results in Australia and New Zealand were not as good as they hoped.

"The result was slightly softer than we anticipated, but we remain committed to exceeding our customers' expectations with a menu and customer experience that listens to, and exceeds, our customers' cravings," says Knight.

The company's experiments with a range of vegan pizzas and its further expansion of a dessert menu has paid off.

"Adding avocado, Extreme Desserts, and our very first Dessert Pizza, typified this approach," says Knight.

"We have the foundations in place for an even stronger performance to deliver a more significant SSS growth increase in H2 compared to H1."

In the first half, the company added 25 new stores, and the company expects to open a record number of stores by 1 July 2018.

In Europe, the company's acquisitions seem to have paid off. In Germany specifically, the company says the early stages of the acquisition of Hallo Pizza is progressing well.

Performance in Japan however was lower than expected, according to Maij, predominately due to depreciation of the Yen vs AUD.

"Our sales have been flat in Japan and we expect an improved performance in the market," says Maij.

Shares in Domino's Pizza are down 9.07 per cent to $45.02 per share at 10.42am AEDT.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

A game changer? Aspiring to the new standard on workplace mental health
Partner Content
Work health and safety regulators have been more active in the area of mental health ri...
Aon
Advertisement

Related Stories

Aristocrat Leisure to buy online gambling giant Playtech for $5 billion

Aristocrat Leisure to buy online gambling giant Playtech for $5 billion

Australian pokies maker Aristocrat Leisure (ASX: ALL) is looking to...

Cyborg Dynamics Engineering secures $3.3m deal for Australia-first unmanned ground vehicle

Cyborg Dynamics Engineering secures $3.3m deal for Australia-first unmanned ground vehicle

Brisbane-based robotics and AI company Cyborg Dynamics Engineering ...

NSW eases border restrictions with ACT and Queensland

NSW eases border restrictions with ACT and Queensland

As the Australian Capital Territory leaves lockdown today and Queen...

Pfizer jab closer to approval for children, IDT to make new Monash vaccine

Pfizer jab closer to approval for children, IDT to make new Monash vaccine

Australian children aged five to 11 years of age could receive Pfiz...