TIDMDPEU
RNS Number : 0834B
DP Eurasia N.V
31 May 2023
31 May 2023
DP Eurasia N.V.
("DP Eurasia" or the "Company", and together with its
subsidiaries, the " Group ")
Trading Update for the four months ended 30 April 2023 (the
"Period") (1) (2)
(millions of TRY, unless otherwise indicated)
For the period ended
30 April
-----------------------
2023 2022 Change
Number of stores 856 828 28
Turkey (Domino's) 658* 617 41
Turkey (COFFY) 40 12 28
Azerbaijan 10 10 -
Georgia 6 5 1
Russia 142 184 -42
Number of stores (excluding
Russia) 714 644 70
Change
Group system sales (after (pre-IAS
IAS 29) (3) 2023 2022 Change 29)
Turkey 1,385.5 1,148.0 20.7% 83.9%
Azerbaijan 25.6 28.1 -8.8% 38.5%
Georgia 18.9 13.2 43.2% 117.4%
COFFY 50.1 10.5 378.4% 612.5%
Total continuing operations 1,480.2 1,199.8 23.4% 87.9%
Russia (discontinued operations) 291.1 283.0 2.8% 2.8%
Grand Total 1,771.2 1,482.8 19.5% 64.8%
---------------------------------- ----------- ---------- ------- ----------
System sales LfL growth(4) (after IAS 29) (pre-IAS 29)
2023 2022 2023 2022
Turkey 17.5% -6.6% 78.9% 47.6%
Azerbaijan (based on AZN) 3.2% -3.5% 3.2% -3.5%
Georgia (based on GEL) 5.0% 45.9% 5.0% 45.9%
Total continuing operations 17.1% -6.2% 76.9% 46.8%
Russia (discontinued operations,
based on RUB) -23.9% -1.5% -23.9% -1.5%
*Including temporarily closed 10 stores due to earthquake
Highlights
-- Strong Period with Group system sales for continuing
operations up 23.4% (pre-IAS 29: 87.9%) or 17.1% on a LfL
basis.
-- Growth reflects ongoing focus on network expansion, strategic
pricing, product and service innovation, and sustained demand for
COFFY.
-- 17.5% LfL growth in Turkey achieved amid sustained
inflationary environment. Swift reaction to devastating earthquake
in February means its impact not expected to be material to
2023.
-- Of the 12 stores not operational because of the earthquake as
reported within our Preliminary Results announcement, two are up
and running. We have been working on several options for the
temporarily closed 10 stores, including moving some to other cities
and opening prefabricated stores in the affected regions.
-- Azerbaijan and Georgian operations delivered a positive LfL
performance in local currencies with growth of 3.2% and 5.0%
respectively.
-- Online delivery system sales in Turkey increased to 83.3%
(2022: 81.2%) as a share of delivery system sales(6) , reflecting
our robust positioning for the online ordering channel. Turkish
online system sales growth was a strong 18.2% (pre-IAS 29:
80.1%).
-- New store opening momentum was maintained across the Group.
o 41 Domino's Pizza net new store openings in Turkey
year-on-year, reflecting strong demand profile.
o One new store in Georgia increases the total number in the
country to six.
o COFFY network increased by 28 stores year-on-year to reach 40.
Expect new COFFY store openings to accelerate during the rest of
the year.
-- COFFY delivered TRY 50.1 million to Group system sales, up
378.4%, and continues to represent an excellent growth
opportunity.
-- The Group continues to evaluate its presence in Russia and,
as previously announced is considering various options which may
include a divestment of its Russian operations. Whilst work on a
potential transaction is ongoing, there can be no certainty as to
the outcome. In the meantime, the Group continues to limit
investment in Russia and remains focused on optimising the existing
store coverage. Total number of stores stood at 142 at Period-end,
compared to 184 year-on-year. All corporate stores were franchised
by the end of May as a result of the optimisation process, while
the total store count in Russia remains unchanged from Period-end.
Cash proceeds from the conversion of corporate stores to franchised
stores have been retained within the Russian business to maintain
the flexibility whilst the Group continues to progress a potential
exit from the country.
-- Liquidity position as of 30 April 2023: TRY 293 million cash
and an undrawn bank facility of TRY 290 million.
-- Guidance is being maintained, though we are mindful of
sustained macro-economic volatility and inflation. Continue to
believe that inflation can be appropriately managed, and management
has an excellent track record of mitigating its impact, but the
risk it poses to overall growth levels remains.
-- Full year guidance is as follows:
LfL growth rate High single digit
(pre IAS 29: 60-70%)
Domino's Pizza net store
openings 35 - 40
COFFY net store openings 50 - 60
Capital expenditure TRY 160 millon
------------------------- ---------------------
Commenting on the update, Chief Executive Officer, Aslan Saranga
said:
"We have started the year well and successfully implemented our
targeted action plan despite the ongoing macro challenges.
Management is extremely experienced in navigating volatility, and
Group system sales remained strong overall with LfL growth.
"The impact of the earthquake in February was devastating, and
our thoughts and condolences remain with all of those who have been
impacted. The Board is proud of the Group's rapid reaction to
support affected colleagues and restore operations where possible.
We continue to stand in solidarity with our employees, business
partners and the wider community.
"Since the beginning of 2022, we have implemented and operated a
targeted strategy that focuses on three areas - strategic pricing
and product innovation, continued digital innovation, and
operational efficiencies to generate sustainable profitability.
This approach has enabled us to combat the high levels of
volatility in the regions in which we operate, and the impact of
our efforts continues to be visible through volume generation and
customer acquisition.
"Our focus on product innovation remains integral. We continue
to broaden our entry price product range and launched a new
mushroom pizza in January which has already reached good volumes.
Following the successful Pizzetta launch last year, we added new
varieties to further enhance the potential of this product line. In
addition, our new 'snacks from the oven' range was launched in
February presenting a broad choice of attractively priced products
to customers who increasingly seek value and affordability. The
latest addition to our product range has been Pizza XL which will
contribute to average ticket price and size mix.
"We continue to improve the online proportion of our sales, and
digital innovation remains an important enabler for us to enhance
the customer experience and further solidify our robust positioning
for the online ordering channel.
"We retain a fundamental commitment to ensuring franchisees
remain profitable. As a result, franchisee demand for both Domino's
Pizza and COFFY continues to be very healthy. We have a strong
pipeline and remain confident that 2023 will be another solid year
for network expansion.
"Consumer demand for COFFY stands very strong owing to its
already proven sales performance. This demand, alongside our
ambitious targets for 2023, will enable us to add further scale to
the business.
"Overall, we are pleased with the good start to the year and
will continue to deliver on our targeted strategy in order to make
the most of what continues to be a significant growth
opportunity."
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: 08006522435
For further details, please contact Buchanan on +44 20 7466 5000
/ dp@buchanan.uk.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 856 stores (658 in Turkey, 142
in Russia, 10 in Azerbaijan and 6 in Georgia) as of 30 April 2023
and operates through its owned corporate stores (14%) and
franchised stores (86%). In addition to its pizza delivery
business, the Group also has its own coffee brand, COFFY, which
trades from 40 stores at period-end, 29 of which are franchised.
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.
Performance Review
Store count As of 30 April
----------------------------------------------------------------------------
2023 2022
Corporate Franchised Total Corporate Franchised Total
Turkey (Domino's) 87 571 658 100 517 617
Azerbaijan - 10 10 - 10 10
Georgia - 6 6 - 5 5
COFFY 11 29 40 5 7 12
Total 98 616 714 105 539 644
Russia 23 119 142 92 92 184
Grand Total 121 735 856 197 631 828
Delivery channel mix and online LfL growth
The following table shows the Group's delivery system sales (7)
, 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 April 2023 and 2022:
For the period ended 30 April
--------------------------------------------------
2023 2022
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
16.1 5.4 16.1 18.3 17.7
Store % % % % 6.3 % %
Group's online 22.3 72.2 30.0 24.8 72.9 33.9
Online platform % % % % % %
61.0 22.4 53.5 56.4 20.8 48.1
Aggregator % % % % % %
83.3 94.6 83.4 81.2 93.7 82.0
Total online % % % % % %
0.5
Call centre 0.6 % - % 0.4 % - 0.3 %
Total 100% 100% 100% 100% 100% 100%
The following table shows the Group's online LfL growth (4) ,
broken down by the Group's two largest countries in which it
operates, for the periods ended 30 April 2023 and 2022:
Group online system sales (after IAS 29) (pre-IAS 29)
LfL growth
2023 2022 2023 2022
Group(5) 7.6% 0.2% 55.4% 44.8%
Turkey 15.9% 0.4% 76.5% 58.6%
Russia (based on RUB) -23.6% -0.4% -23.6% -0.4%
--------------------------- ------------ ---------- ------- ------
Notes
(1) COFFY numbers are included in all Turkey and Group figures,
unless presented separately. Like-for-like figures exclude COFFY.
These numbers are not audited.
(2) IAS 29 'Financial Reporting in Hyperinflationary Economies'
is currently applicable in Turkey. Company's preliminary results
for the year ended 31 December 2022, published on 12 April, was
adjusted accordingly.
(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). This is a non-IFRS
measure and non-IFRS measures are not audited.
(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). This is a non-IFRS measure and non-IFRS measures are
not audited.
(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 April
----------------------------------------------------------
2023 2022
---------------------------- ----------------------------
Currency Period End Period Average Period End Period Average
----------- --------------- ----------- ---------------
EUR/TRY 21.440 20.457 15.545 15.698
RUB/TRY 0.237 0.252 0.202 0.167
EUR/RUB 88.371 81.241 74.559 93.460
Delivery - Take away / Eat in mix
For the period ended 30 April
--------------------------------------------------
2023 2022
------------------------ ------------------------
Turkey Russia Total Turkey Russia Total
Delivery 73.8% 74.3% 73.7% 76.6% 77.9% 76.5%
Take away / Eat in 26.2% 25.7% 26.3% 23.4% 22.1% 23.5%
Total 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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END
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