The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price has fallen over 3% in response to the FY19 report.
For the year to 30 June 2019 the pizza company reported revenue growth of 24.4% to $1.435 billion, with same store sale growth of 3.6%. However, statutory net profit fell 4.6% to $115.9 million. According to Bloomberg, market estimates for the net profit were for a figure of $121.67 million.
Domino's underlying net profit for the 2019 financial year, which excludes significant items, rose by 6.1% to $141.2 million.
Group underlying earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 8.9% to $282.4 million and underlying earnings before interest and tax (EBIT) rose by 7.2% to $220.8 million. Domino's had guided that FY19 EBIT would come in at a range of $227 million to $247 million.
Looking at the individual segments, in the Japanese business there was a strong response to new initiatives, leading to a sales increase of 13.6%. Pleasing unit economics helped grow Japanese EBITDA by 32.1% over the year in constant currency terms.
Europe EBITDA increased by 9.3%, or 5.5% in constant currency terms, to $81.9 million. Normalised margins were impacted by increased franchisee incentives in France, resulting in stronger store unit economics.
The EBITDA for Australia and New Zealand fell 4% to $127.9 million because of a decline in the EBITDA margin, largely due to operating a proportionally higher number of lower performing corporate stores. Fewer store openings and short-term franchisee support also impacted EBITDA.
Due to the increase in underlying earnings, Domino's decided to declare a fully franked final dividend of 52.8 cents per share. This brings the total FY19 dividend to 115.5 cents per share, an increase of 7.1% compared to the prior year.
Domino's FY20 Trading Update
For the first seven weeks of FY20 Domino's revealed that same store sales had grown by 4.7%, an improvement of 4.4% growth in the prior corresponding period. Domino's has added nine new stores to its network so far in the new financial year.
Domino's Outlook
Domino's is expecting its store count to grow to 5,050 stores by 2025 to 2030, an increase of 200%. Of those stores, 2,850 will be based in Europe, 1,200 will be in Australian & New Zealand and 1,000 will be in Japan. Management expect to gain operational leverage from this store expansion.
The pizza company is no longer providing guidance for the next 12 months, but over the next three to five years it expects to achieve annual group same store sales growth of 3% to 6% and store count growth of 7% to 9% annually.
