TIDMDPEU
RNS Number : 2133T
DP Eurasia N.V
21 July 2022
For Immediate Release 21 July 2022
DP Eurasia N.V.
("DP Eurasia" or the "Company", and together with its
subsidiaries, the " Group ")
Trading Update for the six months ended 30 June 2022
Strong trading momentum maintained & FY 2022 guidance
reinstated
For the period ended
30 June
(excl. impact of hyperinflationary
accounting (1) )
---------------------------------------- -------
2022 2021 Change
----------------- --------------------- -------
(in millions of TRY,
unless otherwise indicated)
Number of stores (2) 827 789 38
Group system sales (3)
Turkey 1,201.0 755.7 58.9%
Russia 492.7 278.6 76.8%
Azerbaijan & Georgia 43.0 19.4 121.6%
Total 1,736.7 1,053.7 64.8%
Group system sales LfL growth(4) (excl. impact
of hyperinflationary accounting (1) )
Group(5) 38.6% 52.9%
Turkey 51.0% 64.9%
Russia (based on RUB) -2.6% 18.2%
Highlights
-- Strong growth achieved at the Group level while set against
very strong comparatives, with increased visibility enabling
guidance to be re-instated for the full year ending 31 December
2022.
-- Group system sales increased 64.8% with a like-for-like
("LfL") growth of 38.6%, mainly driven by price adjustments.
-- Adjusting for inflation and last year's VAT reduction of
7ppts to 1% (which lasted until end of July), LfL growth in Turkey
would be flat in 1H 2022 with a low single digit growth in
volumes.
-- Group online system sales (6) growth of 69.7%
o Turkish online system sales growth of 66%
o Russian online system sales growth of 77.5% (-6.8% based on
RUB)
-- Online delivery system sales further increased to 83.2% (June
2021: 77.5%) as a share of delivery system sales (7) , reflecting
DP Eurasia's robust positioning for the online ordering
channel.
-- 21 net store openings in Turkey during the first half of the
year maintains our momentum and is on top of record level of
openings in 2021.
-- Good liquidity position at Period-end with TRY 262.2 million
cash and an undrawn bank facility of TRY 107 million.
-- The new COFFY concept has performed very well with robust
volume growth and accelerating expansion in store network. Having
opened seven new stores in the first half of the year, COFFY traded
from 15 stores at period-end, 10 of which are franchised.
-- Following the appointment of independent non-executive
director (INED), Mr Burak Ertas, at the Annual General Meeting
(AGM) in June 2022, an additional INED will be appointed at the
Extraordinary General Meeting (EGM) which will be held in September
2022.
Outlook
-- The Group is mindful of operating in a volatile environment
with the potential for further macro-economic and geopolitical
challenges, but as a result of increased full year visibility
management is reinstating guidance for 2022.
-- The strong store openings momentum in Turkey is anticipated
to continue in the second half, driven by solid franchisee
demand.
-- The Group continues to limit investment into its Russian
operations given the sustained conflict in the region and is
focused on optimising its existing store network. Management is
monitoring the situation in the region closely.
-- COFFY remains in the early stages of its development, having
launched in 2021, but management believes it represents an
outstanding growth opportunity. More store openings are expected in
the second half
-- Guidance for store openings, LfL growth rates and capital
expenditure for 2022 is as follows:
Turkey Russia
------------------------- ------------------------- ---------------------------
LfL growth rate 55 - 65%* 0% (based on RUB)
Domino's Pizza net store
openings 30 - 40 0
COFFY net store openings 20 - 30 -
Capital expenditure TRY 90 million* RUB 190 million
------------------------- ------------------------- ---------------------------
* excl. impact of hyperinflationary accounting (1)
Commenting on the update, Chief Executive Officer, Aslan Saranga
said:
"In first half of 2022, we continued our strong business
momentum despite the unprecedented challenges in the regions we
operate. This was thanks to our experienced team as we navigated
the operating environment very carefully. Even in these difficult
times, with our innovative and customer-centric mindset, we managed
to grow in a healthy manner. Group system sales grew by 65% with a
39% LfL performance versus a year ago.
"System sales in Turkey grew by 59%, corresponding to 51% LfL
growth. This was achieved against a strong comparative period of
72% system sales growth and 65% LfL growth. In the first half 2022,
with our diligent price adjustments and sustained volume
performance, we broadly caught up with the rapid pace of inflation.
While increasing prices, we remain committed to providing the best
value for money proposition and ensuring our franchisees remain
profitable. We believe that we are well positioned to succeed in
this environment and deliver long-term sustainable growth.
"Our online channel continues to be the main driver behind our
solid growth rates. In Turkey, LfL growth for online system sales
was 59.4% (on top of an almost 100% increase last year) and the
share of online sales in the Turkish delivery system reached 81.2%.
This corresponded to a near seven percentage point increase over
the last twelve months.
"In Russia, we faced into a strong comparable period while
operating in a difficult geo-political and economic environment. As
a result, we had a negative LfL by the end of first half. The
online system sales share increased to 93.5% delivering around one
and a half percentage points of increase. As previously announced,
the Group continues to limit investment into the territory and is
focused on optimising the existing store coverage in Russia,
resulting in the closure of four stores during the first half of
the year. We continue to monitor the situation in the region
closely while the safety and welfare of all the Group's employees
and customers remains our primary priority.
"The strong performance in Turkey continues to generate a very
robust franchisee demand. We opened 21 net stores in Turkey during
the first half of the year. Given our strong pipeline, we remain
confident that 2022 will be another solid year for store
growth.
"Our new and own-branded COFFY concept has performed extremely
well. We achieved robust volume expansion also supported by the
enriched product range, which is well received by the Turkish
public. Our network reached 15 by the end of June with the addition
of new store concepts that serve different consumer profiles. I am
personally very excited for the future growth prospects for COFFY
and believe it has the ability to make a considerable contribution
to our investment story in years to come."
"Whilst the Board is conscious of the ongoing uncertainty,
current trends suggest that our adjusted EBITDA(8) for 2022 is
likely to be above the current market expectations."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018.
Enquiries
DP Eurasia N.V.
İlknur Kocaer, CFA - Investor Relations
Director +90 212 280 9636
Buchanan (Financial Communications)
Richard Oldworth / Toto Berger / Verity +44 20 7466 5000
Parker dp@buchanan.uk.com
A conference call for investors and analysts will be held at
9.00am this morning, which will be accessible using the following
details:
Conference call: Dial-in: +44 (0)330 165 3641
PIN code: 212745
For international dial-in numbers or any further
details, please contact Buchanan on +44 20 7466
5000 / dp@buchanan.uk.com .
A recording of the conference call will subsequently be
available at www.dpeurasia.com .
Notes to Editors
DP Eurasia N.V. is the exclusive master franchisee of the
Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia. The
Company was admitted to the premium listing segment of the Official
List of the Financial Conduct Authority and to trading on the main
market for listed securities of the London Stock Exchange plc on 3
July 2017. The Company (together with its subsidiaries, the " Group
" ) is the largest pizza delivery company in Turkey and the third
largest in Russia. The Group offers pizza delivery and takeaway/
eat-in facilities at its 827 stores (628 in Turkey, 184 in Russia,
10 in Azerbaijan and five in Georgia as of 30 June 2022) and
operates through its owned corporate stores (22%) and franchised
stores (78%). The Group maintains a strategic balance between
corporate and franchised stores, establishing networks of corporate
stores in its most densely populated areas to provide a development
platform upon which to promote best practice and maximise
profitability. The Group has adapted the Domino's Pizza
globally proven business model to its local markets.
Performance Review
Store As at 30 June
count
------------------------------------------------------------------------------
2022 2021
Corporate Franchised Total Corporate Franchised Total
Turkey 94 534 628 103 481 584
Russia 92 92 184 116 76 192
Azerbaijan - 10 10 - 9 9
Georgia - 5 5 - 4 4
Total 186 641 827 218 571 789
Delivery channel mix and online LfL growth
The following table shows the Group's delivery system sales ( 8)
, broken down by ordering channel and by the Group's two largest
countries in which it operates, as a percentage of delivery system
sales for the periods ended 30 June 2022 and 2021:
For the period ended 30 June
--------------------------------------------------
2022 2021
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
18.3 6.5 16.4 25.6 7.7 22.2
Store % % % % % %
Group's online 25.1 72.2 38.2 25.9 69.5 36.5
Online platform % % % % % %
56.1 21.3 45.0 48.1 22.9 41.0
Aggregator % % % % % %
81.2 93.5 83.2 74.0 92.3 77.5
Total online % % % % % %
Call 0.5 0.4 0.4 0.3
centre % - % % - %
Total 100% 100% 100% 100% 100% 100%
The following table shows the Group's online LfL growth (2) ,
broken down by the Group's two largest countries in which it
operates, for the periods ended 30 June 2022 and 2021:
For the period ended
30 June
(excl. impact of hyperinflationary
accounting (1) )
------------------------------------------
2022 2021
----------------------- -----------------
Group online system sales LfL
growth(4)
Group(5) 45.1% 77.6%
Turkey 59.4% 98.0%
Russia (based on RUB) -2.5% 19.2%
Liquidity
The Group continues to have a strong liquidity position with TRY
262.2 million of cash and access to an additional banking facility
of TRY 107 million.
The Group's sufficient liquidity position enables it to pre-pay
its bank borrowings in Russia, despite the recent devaluation of
TRY, if required. The Group obtained a waiver from Sberbank with
respect to its covenants for all four quarters of 2022 and is in
negotiations to reset the covenants or repay the remaining loan.
The principal outstanding amount under the Sberbank loan currently
amounts to RUB 0.7 billion, of which RUB 0.02 billion is supported
by a cash collateral deposit.
Additional disclosure for the period from 1 January 2022 to 31
March 2022
Jubilant Foodworks Limited, a significant shareholder in DPEU
holding approximately 44% of the Company's ordinary share capital,
has certain regulatory disclosure requirements regarding its
investment in DPEU. In connection with this, going forward DPEU
will disclose on a quarterly basis profit after tax and other
comprehensive income.
For the period from 1 January 2022 to 31 March 2022, DPEU
recorded unaudited loss after tax of TRY 29.7 million and unaudited
other comprehensive income of TRY 4.2 million.
Notes
(1) IAS 29 'Financial Reporting in Hyperinflationary Economies'
is currently applicable in Turkey and the Company's interim results
for the period ending 30 June 2022, expected to be published in
September 2022, will be adjusted accordingly. The figures disclosed
in this announcement of 21 July 2022 are unaudited and are not
inflation adjusted unless stated otherwise.
(2) Excluding Coffy stores
(3) System sales are sales generated by the Group's corporate
and franchised stores to external customers and do not represent
revenue of the Group.
(4) Like-for-like growth is a comparison of sales between two
periods that compares system sales of existing system stores. The
Group's system stores that are included in like-for-like system
sales comparisons are those the Group considers to be mature
operations. The Group considers mature stores to be those stores
that have operated for at least 52 weeks preceding the beginning of
the first month of the period used in the like-for-like comparisons
for a certain reporting period, assuming the relevant system store
has not subsequently closed or been "split" (which involves the
Group opening an additional store within the same map of an
existing store or in an overlapping area).
(5) Group like-for-like growth is a weighted average of the
country like-for-like growths based on store numbers as described
in Note (4).
(6) Online system sales are system sales of the Group generated
through its online ordering channel.
(7) Delivery system sales are system sales of the Group
generated through the Group's delivery distribution channel.
(8) EBITDA, adjusted EBITDA and non-recurring and non-trade
income/expenses are not defined by IFRS. These items are determined
by the principles defined by the Group management and comprise
income/expenses which are assumed by the Group management to not be
part of the normal course of business and are non-trading items.
These items which are not defined by IFRS are disclosed by the
Group management separately for a better understanding and
measurement of the sustainable performance of the Group.
Appendices
Exchange Rates
For the period ended 30 June
--------------------------------------
2022 2021
------------------ ------------------
Period Period Period Period
Currency End Average End Average
------- --------- ------- ---------
EUR/TRY 17.522 16.196 10.365 9.485
RUB/TRY 0.321 0.200 0.119 0.105
EUR/RUB 53.858 83.520 86.203 89.547
Delivery - Take away / Eat in mix
For the period ended 30 June
--------------------------------------------------
2022 2021
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
75.7 75.9 75.4 83.2 77.2 81.4
Delivery % % % % % %
Take away / 24.3 24.1 24.6 16.8 22.8 18.6
Eat in % % % % % %
Total(2) 100% 100% 100% 100% 100% 100%
Forward looking statements
This press release includes forward-looking statements which
involve known and unknown risks and uncertainties, many of which
are beyond the Group's control and all of which are based on the
Directors' current beliefs and expectations about future events.
They appear in a number of places throughout this press release and
include all matters that are not historical facts and include
predictions, statements regarding the intentions, beliefs or
current expectations of the Directors or the Group concerning,
among other things, the results of operations, financial condition,
prospects, growth and strategies of the Group and the industry in
which it operates.
No assurance can be given that such future results will be
achieved; actual events or results may differ materially as a
result of risks and uncertainties facing the Group. Such risks and
uncertainties could cause actual results to vary materially from
the future results indicated, expressed, or implied in such
forward-looking statements.
Forward-looking statements contained in this press release speak
only as of the date of this press release. The Company and the
Directors expressly disclaim any obligation or undertaking to
update these forward-looking statements contained in this press
release to reflect any change in their expectations or any change
in events, conditions, or circumstances on which such statements
are based.
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