Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — FY2024 Earnings Presentation
47 slides from Domino's Pizza Enterprises's earnings presentation, Aug 23, 2024
Slide 1: FY24 Full-Year Market Presentation – correction
Domino’s Pizza Enterprises Limited 1/485 Kingsford Smith Drive Hamilton, QLD, Australia 4007 ACN: 010 489 326 www.dominos.com.au 21 August 2024 FY24 Full-Year Market Presentation – correction The Market Presentation for the year ended 30 June 2024 released earlier today contained an error on page 10
Slide 2: Domino's Pizza Enterprises Limited (DPE) Period Ending 30.06.2024
DOMINO’S PIZZA ENTERPRISES LIMITED (DPE) PERIOD ENDING 30.06.2024
Slide 3: Our mission and strategy is clear…
Our mission and strategy is clear… 2
Slide 4: Mission: Inspired Products & Services, Designed for Delivery
Mission Inspired Products & Services CUSTOMER DOMINO’S DELIVERED DELIVERED Designed for Delivery (PICK UP) (PREMIUM) That are high quality and delivered Value = (Product + Service + Image) / Price quickly for an affordable price PRODUCT QUALITY: 4.5 DELIVERY: 18 MINS NET PROMOTER SCORE LUNCH DINNER
Slide 5: Regional EBIT: Europe, ANZ and Asia
4 EUROPE EBIT ▪ ANZ & Germany led the way: Growing share of category through launch of inspired new products, flowing through to improved unit economics EBIT:Sales margin +80 bps ▪ France and Japan underperformed; a turnaround plan is in place for both markets ANZ EBIT ▪ Grew average Franchise Partn
Slide 6: Network sales growth, underlying NPAT and EBIT growth
(1,2) 5 NETWORK SALES GROWTH (vs. FY23) UNDERLYING NPAT UNDERLYING EBIT GROWTH (vs. FY23) 1) Underlying Performance – excluding Non-Recurring Items; see slides 14 and 32 for further details 2) Free Cash Flow and Net CAPEX – excluding payments relating to acquisitions; see slides 15 and 16 for furthe
Slide 7: Restructuring Program Summary
6 FY24 Forecast FY23 Actual FY24 Actual FY24 Actual Restructuring Program Summary - $m Network Savings Non Recurring Costs Non Recurring Costs Network Savings 23.08.2023 Denmark Market Closure $26.2m - $12m $12.0m Optimising the Store Network $68.1m $29.6m $16m $13.2m Planned Commissary closures & l
Slide 8: Franchise partner store profitability by market
7 (1,2) • ANZ: EBITDA grew year-on-year in both Australia and New Zealand, reflecting higher sales • JAPAN: average franchise store H2 24 EBITDA more than doubled H2 23 with less discounting • GERMANY: store EBITDA materially higher than prior year and the highest for the Group. Paybacks are now sim
Slide 9: Strategies to improve group-wide unit economics
8 REINVESTING IN THE NETWORK IS JUST ONE OF A SUITE OF INITIATIVES DPE WILL APPLY TO IMPROVE UNIT ECONOMICS ▲ ▼ ▲ • Inspired products to reach • Inspired products deliver • DMP is not experiencing more customers on more higher margins Targeting material build cost increases occasions (e.g. snacking)
Slide 10: Same store sales by region, second half
9 • ANZ reported highest H2 SSS in 7 years (+7.5%) through a • Europe SSS flat in the second half mix of higher ticket and more customers • Strong SSS growth in Germany through positive customer • Japan SSS negative (-2.5%) but a pleasing development was count and ticket growth (delivery & carry-out
Slide 11: General trading conditions for first 7 weeks of FY25
10 (1) ANZ ANZ continues to perform positively, compounding prior year one-off high traffic events including the FIFA Women’s World Cup Football EUROPE PCP +2.8% Regional sales are compounding strong results from the pcp (FY25 SSS -0.7% EXCL. MALAYSIA) (1) Sales in the BENELUX are positive, but nega
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Slide 13: Network sales, EBIT and NPAT vs last year
12 ▪ Network Sales +4.6% vs. Last Year (1) (+3.3% in constant currency) ▪ EBIT +3.0% vs. Last Year (1) (+2.2% in constant currency) ▪ NPAT -1.9% vs. Last Year (1) (-2.7% in constant currency) 1) FX – Network Sales and NPAT growth figures, excluding FX, are calculated by using FY23 FX rates for respe
Slide 14: EBIT by region vs last year
13 ▪ Group EBIT +3.0% vs. Last Year (1) (+2.2% in constant currency) ▪ ANZ EBIT +10.4% vs. Last Year ▪ Europe EBIT +33.8% vs. Last Year (1) (+26.6% in constant currency) ▪ Asia EBIT -28.7% vs. Last Year (-25.0% in constant currency) (1) ▪ Global EBIT -26.6% vs. Last Year 1) FX – Network Sales and NP
Slide 15: Non-Recurring Items of $44.2m
14 Non-Recurring Items are $44.2m, relating to: Group - Non-Recurring Items - $m FY24 Actual Including store closures and write-downs (Optimising the Store Network) $29.6m Employee related costs associated with the restructure and move to shared-services (Streamlining $23.1m One-off marketing contri
Slide 16: Cash flow
15 ▪ Working capital was primarily impacted by softer H2 Network Sales in Asia, and by the timing of payment of trade payables ▪ Other Movements predominantly relate to available tax offsets, anticipated to unwind in H1 25 (timing), which has also benefitted working capital (Trade & Other Payables)
Slide 17: Net capital expenditure
16 ▪ FY24 Net CAPEX excluding acquisitions $62.3m (FY23 $159.1m) ▪ CAPEX which Recycles $0.6m (FY23 $84.1m) $0.6 m $8.6 m ‒ Gross CAPEX $63.6m (prior-year $130.9m), including investment in new corporate stores, franchisee loans for new and existing stores and franchisee acquisitions ‒ Cash inflows $
Slide 18: Net leverage and banking covenant ratios
17 (1) BANKING COVENANT RATIOS NET LEVERAGE CONTINUES TO MATERIALLY REDUCE NET LEVERAGE ▪ As communicated at the Full Year FY23 Market Presentation; DPE has deployed (exl AASB16) effective capital Management initiatives, which have resulted in a $148.6m reduction in net debt during FY24, including:
Slide 19: Markets
MARKETS 18
Slide 20: Global strategy initiatives
19 Aggregator partnerships ▪ A global strategy of seeking profitable, incremental customers, bolstered by 3rd party delivery Menu development with inspired products ▪ New products to reach more customers on more occasions, grow sales and reduce COGS Increasing and maximising media spend ▪ Franchise
Slide 21: Aggregator partnerships and incremental sales
20 ▲ ▼ • Incremental sales through 3rd party channels exemplify • Continued high-growth, incremental sales, even in more “High Volume Mentality” – leveraging existing labour established markets: e.g. Uber launch in NL and Japan and fixed costs • Extended trials using aggregators for 3rd party delive
Slide 22: ANZ initiatives offsetting commodity and labour costs
21 DOMINO’S ANZ INITIATIVES HAVE HELPED TO OFFSET INCREASES IN GLOBAL COMMODITY COSTS AND LABOUR ▲ ▼ • Together with franchise partners, we focused on execution – Product • Extended trials of new technology to Quality (PQ) and NPS – and menu help rostering and in-store labour development Management,
Slide 23: Key markets applying global strategy with local nuances
22 THESE KEY MARKETS ARE APPLYING DPE’S GLOBAL STRATEGY WITH LOCAL NUANCES • Both markets are building on • BENELUX has been testing their • BENELUX is working across longstanding, successful new brand positioning in occasions with new products relationships with aggregators preparation of a full la
Slide 24: Domino's France plan to grow sales and EBIT
23 DOMINO’S FRANCE IS PROFITABLE AND HAS A PLAN TO GROW SALES & EBIT WITH A NEW COMMUNICATIONS STRATEGY • Improved engagement with franchise • New CMO commenced May 2024 partners is essential & underway: • Consistent pricing & low entry point attacts • In H2 24, 275 additional stores joined Uber FIR
Slide 25: Japan: optimising our business to invest in our future
24 OPTIMISING OUR BUSINESS TO INVEST IN OUR FUTURE • Full Year benefit of 17 store closures in • Ongoing testing of pricing & new products is • New Japanese CMO commences September H2 24, with an additional 62 stores to be helping overcome inflationary pressures of • New products including the Pizza
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25
Slide 27: Long-term opportunity and FY25 SSS and store outlook
26 (1) REACHING 3%-6% GROUP SSS IN FY25 IS DEPENDENT ON IMPROVEMENT IN JAPAN AND FRANCE DOMINO’S PIZZA ENTERPRISES LTD IS COMMITTED TO THE LONG-TERM OPPORTUNITY IN ALL MARKETS ASIA 2.0X CURRENT MARKET SIZE DPE ANTICIPATES GROSS STORE OPENINGS IN FY25 WILL BE ~3% OF THE NETWORK. ANZ 1.3X CURRENT MARK
Slide 28: Commodity and labour cost outlook
27 • Key commodities (incl. wheat and tomatoes) are expected to • Wage increases are expected but are in line with CPI. reduce in FY25 • New Live labour models have reduced labour 1-2%/sales in • Some markets will benefit from costs slightly down on recent ANZ and NL: this technology is being expand
Slide 29: Turnaround plans and unit economics focus
28 Japan/France have a locally-specific turnaround plan in the implementation phase – FY25 improvement is expected Initiatives being implemented in some of DPE’s most successful markets (ANZ, Germany, BENELUX) have broad application in other markets With assistance from our Centres of Expertise some
Slide 30: FY25 earnings growth planned in H2
29 FULL YEAR GROUP EARNINGS GROWTH IS PLANNED TO BE DELIVERED IN H2 • In H1 Management expect earnings growth in ANZ and Europe, offset in Japan by reinvesting warehouse margin for additional media – still expecting Group earnings growth on H2 24 • A group-wide improvement in corporate store perform
Slide 31: Appendice
APPENDICE
Slide 32: DMP Annual General Meeting
31 DMP ANNUAL GENERAL MEETING Brisbane
Slide 33: Reconciliation – Statutory profit to Underlying – FY24
32 Reconciliation – Statutory profit to Underlying – FY24 (1) Continuing Items Operations 1) FY24 Underlying Profit and Non-Recurring Items, excluding Discontinued Operations
Slide 34: Group Balance Sheet
33 Group Balance Sheet FY24 FY23 Var ▪ Trade receivables and inventories were impacted by softer H2 Network Sales in Asia and improved cash collection from payment gateway providers in Japan ▪ Other current assets decreased -$21.1m, primarily related to tax refunds received and utilised during FY24
Slide 35: Banking covenant ratios
34 (1) 1) The Group has obtained agreement from its lenders for a temporary increase in its Net Leverage covenant to 3.5x, from 3.0x, for both H124 and Full Year FY24 reporting periods
Slide 36: Return on capital employed, return on equity, cash conversion
(1) 35 RETURN ON CAPITAL EMPLOYED RETURN ON EQUITY CASH CONVERSION 1) The above are presented on an Underlying basis, excluding Non-recurring Items
Slide 37: Net leverage ratio and interest coverage
(1,2) 36 NET LEVERAGE RATIO INTEREST COVERAGE Borrowings Finance Leases 1) The above are presented on an Underlying basis, excluding Non-recurring Items 2) The Group has obtained agreement from its lenders for a temporary increase in its Net Leverage covenant to 3.5x, from 3.0x, for both H124 and Fu
Slide 38: Group historic AUD FX conversion rates
a A GROUP —HISTORIC AUD FX CONVERSION RATES " Currency Balance Sheet P&L BalanceSheet P&L Balance Sheet EUR 0.6099 0.6433 0.6183 0.6032 0.6196 0.6061 JPY 95.9200 92.4503 96.7000 95.3877 106.6100 97.7602 MYR 3.1021 3.0100 3.1434 3.0440 3.1271 3.0785 NZD 1.0884 1.0926 1.0769 1.0805 1.0928 1.0809 PLN 2
Slide 39: Group network store count
38 GROUP NETWORK STORE COUNT REGIONAL STORE COUNT AS A % OF NETWORK STORE COUNT REGIONAL STORE COUNT ▪ +116 New store openings during FY24 ▪ Asia +62 stores: Japan +33, Malaysia +20, Taiwan +5, Singapore +3 and Cambodia +1 ▪ Europe +40 stores: France +16, Netherlands +15, Germany +8 and Belgium +1 ▪
Slide 40: Historical store count and future outlook
39 HISTORICAL STORE COUNT AND FUTURE OUTLOOK (1) ASIA 2.0X CURRENT MARKET SIZE ANZ 1.3X CURRENT MARKET SIZE HISTORICAL UNDERLYING EBIT EUROPE 2.1X CURRENT MARKET SIZE GROUP 1.9X CURRENT MARKET SIZE STORE EXPANSION IS IMPORTANT TO THE GROWTH OF FRANCHISE PARTNERS AND DPE, BUT RELIES ON IMPROVED UNIT
Slide 41: Network sales, sales growth and store count
(1,2) 40 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have b
Slide 42: Network sales, sales growth and store count
(1,2) 41 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have b
Slide 43: Network sales, sales growth and store count
(1,2) 42 NETWORK SALES SALES GROWTH NETWORK STORE COUNT EXISTING AND NEW STORE SALES 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have b
Slide 44: Network sales growth in constant currency
43 (1,2) 1) FX translation headwind has been removed from the above by re-translating current period and prior-periods using FY23 FX rates 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have been re-stated, reflecting updated internal Management Reporting
Slide 45: Network sales including FX translation
(1,2) 44 1) Including FX translation for FY24 2) Where applicable, prior-period Online Sales and Online Sales Growth figures have been re-stated, reflecting updated internal Management Reporting
Slide 46: Same store sales and network sales definitions
45 SAME STORE SALES ARE CALCULATED NETWORK SALES ARE CALCULATED IN BOTH WEEKLY, MEASURED IN LOCAL CURRENCY LOCAL CURRENCY AND AUD Same Store Sales is the process of comparing year- Network Sales growth includes sales for all stores on-year growth of existing, mature, stores Stores are included from
Slide 47: Disclaimer
46 • Domino’s Pizza Enterprises Limited (Domino’s) advises that the information in this presentation contains forward looking statements which may be subject to significant uncertainties outside of Domino’s control • DPE does not undertake any obligation to provide recipients of this presentation wi
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