Domino's Pizza UK & IRL plc (DOM.L), a pizza delivery company in the UK and Ireland, reported Monday a higher profit in its first six months of fiscal 2010, mainly reflecting strong growth in like-for-like and UK sales. Further, the company declared an increase of 28.6% in the interim dividend.
Profit before taxation for the 26 weeks ended June 27 grew to GBP 17.00 million from GBP 13.10 million last year.
The 2010 first-half results included exceptional charges of GBP 506 thousand, mainly related to restructuring and reorganisation costs, while prior-year results included exceptional charges of GBP 513 thousand.
Before exceptional items, 26-week pre-tax profit increased 28.6% to GBP 17.51 million from GBP 13.61 million last year.
On an after-tax basis, profit for the period attributable to owners of the parent rose to GBP 12.06 million from last year's GBP 9.30 million. Earnings per share grew 28.5% to 7.62 pence from 5.93 pence a year ago. Adjusted profit for the period was GBP 12.50 million, up from GBP 9.74 million in the previous year, and adjusted earnings per share climbed 27.1% to 7.89 pence from 6.21 pence in the prior-year period.
The company, celebrating 25 years in business, generated revenue of GBP 91.33 million, up 23.9% from GBP 73.70 million in the comparable period last year.
Revenues from royalties and sales to franchisees climbed to GBP 84.93 million from GBP 68.03 million a year ago. Rental income on leasehold and freehold property was GBP 6.22 million, higher than last year's GBP 5.53 million.
On a geographical perspective, first-half revenues from United Kingdom rose to GBP 82.24 million from GBP 65.62 million, and Ireland's revenues grew to GBP 9.09 million from GBP 8.08 million in 2009.
System sales, i.e., sales from all stores in the UK and Republic of Ireland, increased 20.8% to GBP 237.1 million from GBP 196.4 million a year ago.
Like-for-like sales, or sales in stores that were open before December 28, 2008, grew 13.7% in 553 mature stores, compared to growth of 7.1% in 501 stores last year.
During the period, sales growth in e-commerce business was 61.4%, resulting in total online sales of GBP 56.9 million , compared to last year's growth of 38.9%, with online sales of GBP 35.2 million. Online sales accounted for 32.7% of UK delivered sales, compared to 26.2% in 2009.
Domino's Pizza attributed the strong revenue growth in the six months to "a combination of tactical promotions, the third year of our Britain's Got Talent sponsorship, the start of the football World Cup and the continued growth in sales through our e-commerce platform."
The significantly higher volumes in the first 26 weeks of the year mainly has been driven by price based promotions. The company added that prices of its overall basket of food ingredients have remained relatively stable year-on-year, reflecting its strategy of entering into fixed price contracts across most of its food lines.
Gross profit for the first half increased to GBP 33.90 million from GBP 28.04 million last year. Operating profit was GBP 17.20 million, compared to prior-year's GBP 13.21 million, and adjusted operating profit grew 27.4% to GBP 17.48 million from GBP 13.72 million last year.
As of June 27, 2010, Domino's Pizza operated 627 stores in the UK and the Republic of Ireland. Of these, 496 stores are in England, 47 in Scotland, 22 in Wales, 15 in Northern Ireland, 46 in the Republic of Ireland and one is a mobile unit. The company has opened 19 new stores so far this year, and is on track for 55 new openings.
Commenting on the results, Chief Executive Officer, Chris Moore, said, "It is easy to try and attribute our success to one thing - be it the weather, or Britain's Got Talent, or the World Cup - but the underlying trend shows a more compelling picture. We have now been in business for 25 years and those years of experience give us the foundation from which we can seize every opportunity."
Further, the company said its Board declared an increase of 28.6% in the interim dividend to 4.5 pence per share from last year's 3.5 pence per share, in line with its strategy of returning cash not required for the growth and expansion of the business to shareholders. The dividend will be paid on August 20 to shareholders on the register as at July 23, 2010.
The growth in dividend reflects strong first-half performance, as well as the resilience and positive outlook of future anticipated free cashflows.
Further, Moore said, "With a strong start to the year, we face the future with confidence - albeit up against some very tough comparatives from the second half of 2009. While we may be 25, we know that there is still so much more to learn to maximize the opportunities and unlock the potential of what is still a relatively under-developed market."
On the London Stock Exchange, DOM.L is currently trading at 406.00 pence, up 3.00 pence or 0.74%, on a volume of 47 thousand shares.
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