Shares in Value Logo
Product Review Img Vertical

Date : 09/03/2022

Domino’s Pizza Enterprises (ASX: DMP) NPAT declined despite Revenue Surge

Domino’s Pizza Enterprises (ASX: DMP) business model works around the operation of retail food outlets and franchise services. The company is Australia’s largest pizza chain regarding network stores and network sales and is the massive global franchisee of the Domino’s Pizza brand. DMP was founded in 1983 in Queensland, and as of now, its headquarters are in Hamilton, Australia.

DMP is Domino’s largest non-US franchisee. Japan, Germany, Luxembourg, Denmark, Australia, New Zealand & Taiwan are all master franchisees of Domino’s brand and network. DMP already operates over 3,200 outlets globally.

DMP slightly declined in today’s regular trading session gaining around 0.50% to reach $79.97. The stock closed at $80.36 yesterday. The current market cap of the company is approximately 6.99 billion AUD. The stock lost more than 48.8% in the last six months.

DMP: 1H 2022 Key Financials

DMP lost more value since it released its results for the first half of 2022. But the stock is continuously gaining and losing, attempting to reach its previous value when it released its financial statements last week.

Domino's Pizza Enterprises

  1. 1H 2022 saw a gain of 11% in-network sales to reach $2.05 billion compared to $1.8 billion in 1H2021.
  2. The company’s net revenue was around $1.2 billion in 1H 2022, gaining more than 10% compared to $1.09 billion in 1H2021.
  3. DMP’s EBIT was slightly lower in 1H 2022. The EBIT was around $144 million in 1H 2022, losing more than 5.7% compared to $153 million in 1H 2021.
  4. NPAT was $91.3 million in 1H 2022, declining by more than 5.3% compared to $96.4 million in 2021.
  5. Basic EPS in 1H 2022 was 105.5 cents losing 5.3% compared to 111.4 cents in 1H 2021.

DMP: Reason for the decline in the profitability

There are a few reasons linked to the decline in the EBIT, NPAT, and EPS. Domino’s first-half 2022 earnings were lower than those of the prior comparable period, mainly due to investments in Project Ignite (ANZ) and a rebasing of sales in Japan in the second quarter of 2022. The rebasing of sales in Japan followed record growth, resulting in same-store sales in Japan remaining +40 percent higher than before COVID-19.

The other reason is an increase in operational expenses. DMP’s food, equipment, and packaging costs increased by $64 million. A rise in employee costs of $11 million and a rise in marketing costs of $16 million was revealed by Domino’s Pizza.

DMP: Dividend Update

Domino’s Pizza Enterprises Ltd. (ASX: DMP) will pay an interim dividend of 88.4 cents per share, or 70 percent franked, to shareholders. This is due on March 17, 2022, with a record date of March 2, 2022. The company is among the consistent companies returning value to its shareholders regularly each year in dividends.

Impact of Covid-19 on DMP

Don Meij, Group CEO & MD, praised the efforts of over 80,000 team members and franchisees who serviced their communities in some of the most challenging conditions the COVID-19 pandemic has yet imposed.

He further added that we expect another excellent year, thanks to our long-term investments that increased during COVID-19.

What’s next for DMP?

The company’s store network expansion is set to reach a record level this year as Domino’s Pizza Enterprises Ltd (ASX.DMP) and franchisees reinvest in a long-term strategy. On target to add 500 stores this financial year, the company and its franchisees added 285 new stores in the first half of the year.

Organic stores opened in Asia (+87), Europe (+39), and Australia/New Zealand (+3). Marking the start of Project Ignite, 19 corporate stores in Australia were refranchised to current store managers and franchisees.

This year, Domino’s hopes to exceed $4 billion in global food sales, with more than $3 billion in online sales, just two years after serving $3 billion in global food sales.

Conclusion

The company is focused on its vision of global expansion. As a result, they plan to add 500 new stores in fiscal 2022. Even though the current year’s profitability was low despite the revenue gain, the company expects robust growth in online and offline sales. Company officials are confident that despite this short-term setback, its operations are far more vital than they were before COVID-19.

Are You Looking To Buy The Best Stocks In 2022?

Stay on top of upcoming market trends! Whether you are an SMSF investor or a young investor with your portfolio, we cover a wide range of stocks across all sectors, including mining, financials, industrials, real estate, technology, health and biotech, etc. It will give you an edge to invest and trade ASX listed stocks across large, mid and small caps with an advantage.

Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your free Report instantly for Top 3 Dividend Stocks to buy in 2022!

 

Top 5 ASX Stocks
to Buy for Capital Growth in 2022

asx landing page
The hardest part to finding growth stocks is having an ability to understand the finer details of these companies from their valuations through to first mover advantage and having key factors on hand to make informed investment decisions.

Our experts take the guesswork out.

Download Your Free Report

By downloading this report you agree to the TERMS AND CONDITIONS and our PRIVACY POLICY

Scroll to Top

Login

By submitting this form, I agree to the TERMS AND CONDITIONS and PRIVATE POLICY

Please fill in your details to download the free report.