Domino’s Pizza Enterprises Ltd. shares rocket on booming profits

The Domino’s Pizza enterprises Ltd. (ASX:DMP) share price could rebound today after yet another strong profit report from the company.

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Shares of Domino’s Pizza Enterprises Ltd. (ASX: DMP) will be a focal point of the market today after the pizza chain owner sharply lifted half-year revenue and profit to finish the day up 6%.

In the six-month period ended 31 December 2015, Domino’s Pizza Enterprises upped revenue 29.6% to $445 million and reported a profit of $43.3 million, up 48.8% on the prior corresponding period.

Pleasingly, a 70% franked 34.7 cents per share interim dividend was declared – up 41%.

All geographical business lines put in a strong showing, with the Japanese business reporting a 51% increase in operating profit.

The company said its underlying results reflected the organic growth of the business since recent acquisitions in France and Germany were yet to contribute to results.

Commenting on the group’s strong performance in local markets, Don Meij, the group’s CEO and managing director said, “Our commitment is to a philosophy of being “slow where it matters, fast where it counts.”

“Slow in the careful preparation of high quality pizzas, safe delivery and friendly service at the door,” he added. “Fast in that we are cutting the cook time in half, hustling to and from cars and using faster ovens and improved technology.”

It is Domino’s commitment to innovation, variety, its people and technology that has enabled it to thrive. For example, during the half, Domino’s opened its first-ever 10-minute delivery store in New Farm, Queensland.

Commenting on the outlook for the Australia/New Zealand business, Mr Meij said, “The significant investment in our digital pipeline, as well as the opening of more than 50 new stores for FY16 will continue to improve productivity and drive sales in the second half and beyond.”

In Europe, same-store sales, a key measure of growth in retail companies, were 8.5% higher while developments in France and Germany place the group in good stead for more store openings.

“The next six months are set to be just as strong with the Company set to achieve a record number of organic new store openings (in excess of 60 new stores in FY16, excluding acquisitions) and franchisee profitability at record highs which is stimulating strong organic growth,” Mr Meij said.

Japan same-store sales fell 1.2%, but the company said it outperformed competitors. The Japanese business continues to invest in innovation and global platforms to improve its results over the long term.

Outlook

With the first half now behind it, Domino’s has upped its 2016 full-year guidance to net profit growth of 35%. Australia and New Zealand same-store sales are expected to be between 11% and 13% higher. Europe same store sales guidance has also been increased to between 8% and 10%, while guidance for Japan was lowered to between 0% and negative 2%.

The company expects to open between 460 and 500 stores in FY16, including acquisitions.

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Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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