Domino's Pizza Group Plc · LSE:DOM
Domino's Pizza — H1 2015 Earnings Presentation
41 slides from Domino's Pizza's earnings presentation, Jun 28, 2015
Slide 1: Interim Results for the 26 weeks ended 28th June 2015
Domino’s Pizza Group plc Interim Results for the 26 weeks ended 28th June 2015
Slide 2: Forward-looking statements caution
Forward-looking statements caution These half-yearly results, our Annual Results, Annual Report and the Domino’s Pizza website may contain certain "forward-looking statements" with respect to Domino’s Pizza Group plc and the Group's financial condition, results of operations and business, and certai
Slide 3: Team
Team David Wild Chief Executive Officer Paul Doughty Chief Financial Officer 3
Slide 4: Highlights
Highlights 10%+ LFL sales growth for the seventh successive quarter in core UK business Significant progress in digital initiatives - sales now 77% of delivered sales and 10m+ Apps downloaded Record performance in 21 new stores opened Franchisees continuing to benefit from increased profitab
Slide 5: Summary financial highlights
Summary financial highlights Group Sales UK LFL Store openings Digital UK UK 77.0% £426.7m 10.3% 21 new stores of delivered sales 14% Underlying operating EPS Dividend Net Cash profit1 £32.1m 15.3p 9.00p £19.2m 30% 32% 15% 1 reconciliation between operating profit and underlying operating profit inc
Slide 6: Strong trading results
Strong trading results 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 % change £m £m UK system sales 397.0 344.7 15.2% ROI system sales2 22.3 20.9 6.5% Germany system sales2 4.6 4.7 (1.7)% Switzerland system sales2 5.4 4.7 14.0% Currency impact (2.6) Group system sales 426.7 375.0 13.8% Und
Slide 7: Group profit bridge: UK growth; narrowing losses in Germany
Group profit bridge: UK growth; narrowing losses in Germany 35.0 32.1 2.9 (0.3) 4.8 30.0 24.7 25.0 20.0 Needs updating to a territory walk £m 15.0 10.0 5.0 0.0 H1 2014 underlying UK & ROI Germany Switzerland H1 2015 underlying operating profit operating profit 1 reconciliation between operating prof
Slide 8: UK & ROI income statement
UK & ROI income statement 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 % change UK system sales £397.0m £344.7m 15.2% UK LFL sales 10.3% 11.3% ROI system sales2 £22.3m £20.9m 6.5% ROI LFL sales (€) 6.5% 3.2% Currency impact £(2.3)m UK & ROI system sales £417.0m £365.6m 14.1% Underlying op
Slide 9: UK: Sales driven by double digit LFLs and new stores
UK: Sales driven by double digit LFLs and new stores £420.0 £400.0 £4.5 £397.0 £12.8 -£0.2 £35.4 £380.0 LFL +10.3% £m £360.0 £344.7 £340.0 £320.0 +15.2% £300.0 2014 H1 Mature Stores Immature Stores New Stores Closed stores 2015 H1 Note: Mature stores defined as stores opened before 29th December 201
Slide 10: UK: Better value for customers through bundle deals
UK: Better value for customers through bundle deals Focus on value through bundle offers for families Top national deals: Winter Survival, Pick ‘n’ Mix & Two for Tuesdays LFL sales decomposition Basket composition (Units) £390.0 2.0% +24.0% YoY 2.9% £378.8 £380.0 7.4% -2.0% +43.1% YoY £370.0 +8.
Slide 11: Cash generation remains a key strength of the business
Cash generation remains a key strength of the business 60.0 1.1 0.7 -5.2 50.0 3.2 35.1 -5.3 -5.3 40.0 -16.0 £m 30.0 20.0 19.2 11.0 10.0 0.0 Net cash at EBITDA Shares Interest & Share-based Capex Working Tax Dividends Net cash as beginning of issued Other payment Capital and paid at 28 June period ch
Slide 12: Interim dividend increased by 15%
Interim dividend increased by 15% 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 % change Dividend per share (pence) 9.00 7.81 15.2% Dividend cover 1.7x 1.5x Key dates: Ex-dividend date: 6th August Payment date: 4th September 12
Slide 13: H1 2015 Business Review
H1 2015 Business Review WE ARE & DOMINO'S 13
Slide 14: Key drivers underpin growth for the future
Key drivers underpin growth for the future E-commerce performance: investment in digital drives increased number of Digital customer visits, improved conversion rates and higher value per order New stores Continued roll-out of new stores. Those added in 2015 show significant growth in Average Sales
Slide 15: UK: Digital continues to drive sales
UK: Digital continues to drive sales Investment in e-commerce software development has doubled this year and will again in 2016 App is now the largest online sales channel – 10m app downloads UK e-commerce £300.0 90.0% 77.0% 80.0% £250.0 69.7% 63.3% 70.0% £200.0 52.4% 60.0% 41.9% 50.0% £m £150.0
Slide 16: UK: Key benefits of growth in digital
UK: Key benefits of growth in digital Online orders Online sales £1 Online order value2 16.0 300.0 £21.20 14.4 £21.10 254.0 14.0 £21.10 250.0 11.8 12.0 204.2 £21.00 +21.8% +24.4% +2.1% 200.0 10.0 £20.90 £Gross £m 8.0 150.0 £20.80 m 6.0 £20.70 £20.66 100.0 4.0 £20.60 50.0 2.0 £20.50 0.0 0.0 £20.40 20
Slide 17: UK: Continued migration to the mobile app
UK: Continued migration to the mobile app Website orders Website conversion rate Website order value2 6.8 38.0% 37.7% £21.80 £21.67 6.6 6.6 £21.60 Conversion rate % 37.0% £21.40 -9.0% +7.8% 6.4 +4.1% 36.0% £21.20 £Gross 6.2 35.0% £21.00 m 6.0 £20.81 35.0% £20.80 6.0 34.0% £20.60 5.8 £20.40 5.6 33.0%
Slide 18: Continued investment in digital: mobile responsive site launched
Continued investment in digital: mobile responsive site launched to improve conversion Mobile responsive design launched in July, improving the online customer experience in a rapidly growing area Huge scope for improvement on conversion rates in the Web-mobile area Distribution of online orders
Slide 19: Continued investment in digital: journey to 'One touch' ordering
Continued investment in digital: journey to ‘One touch’ ordering Focus on delivering ‘One touch’ ordering Ability to save payment cards launched on the website in April Automated prompt for site registration during purchase This feature has more than tripled registration rates Future develop
Slide 20: Continued investment in digital: engaging customers through pizza tracker
Continued investment in digital: engaging the customers through pizza tracker Increased personalisation and personality Introduction of a new animated character ‘Dom’ our pizza tracking bot Bespoke content for each stage of the tracker A uniform ‘look and feel’ across all platforms (web, iOS
Slide 21: Continued investment in digital: further developments in digital marketing
Continued investment in digital: further developments in digital marketing Launch of local marketing portal - enables local franchisees to run digital campaigns more effectively locally AB Testing has been launched – 7 tests scheduled this year 1-2-1 email programme continues with over 78.6m1
Slide 22: Marketing and product innovation
Marketing and product innovation Pizza legends Hollyoaks New products 44% of adults have viewed the programme & 59% of 16-34s Optimising TV presence in an 280k creations inflationary market and counting Note: Data source for viewing figures is the media agency Arena 22
Slide 23: ....with more to come in 2015
….with more to come in 2015 Amplify awareness of the carryout offering via digital Rebrand as ‘Click & Collect’ service Convenience of prepaid Store locations geared to take advantage of the carryout opportunity for sales SMS when order is ready to pick up Continued pipeline of innovatio
Slide 24: UK: Significantly improved performance from immature & new stores
UK: Significantly improved performance from immature & new stores Immature stores New stores New store average spend per £13,500 £13,265 £16,000 address £15,337 £0.90 £0.85 £13,000 +11.5% £15,000 +11.8% +70.8% £0.80 Average Weekly sales £ Average Weekly sales £ £12,500 +£1,373 +£1,614 +£0.35 £14,000
Slide 25: UK: Improving profitability for franchisees
UK: Improving profitability for franchisees 2014 H1 2015 H1 % Increase Average Sales (AWUS) £17,154 £18,921 10.3% Strong EBITDA performance up from 12.9% to 15.1% Improvement in EBITDA benefiting from lower food prices secured by DPG Benign food cost outlook Note: Source of franchisee EBITDA i
Slide 26: ROI: Economic recovery improving performance
ROI: Economic recovery improving performance Improved LFL +6.5%, driven through better value offerings to ROI LFL customers 7.0% 6.5% 6.0% LFL in Dublin ahead of rest 5.3% 5.0% Dublin 7.6% Provincial 2.4% 4.0% 3.2% Rural 6.4% 3.0% 2.0% Online sales up 29.2% YOY, and now accounts for 51.0
Slide 27: Germany income statement
Germany income statement 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 % change Germany system sales1 £4.6m £4.7m (1.7)% Currency impact £(0.5)m Germany system sales €5.6m €5.7m (1.7)% Germany LFL sales (€) 3.0% (1.7)% Germany underlying operating profit2 £(1.8)m £(4.7)m 61.7% Germany unde
Slide 28: Germany: continued progress on store level economics
Germany: continued progress on store level economics 21 stores (9 franchised, 12 corporate) LFL sales back into positive territory, up 3.0% in H1 Losses are reducing YOY due to management focus on store economics: Lower labour % Rationalising delivery areas Continued low level of capex He
Slide 29: Switzerland income statement
Switzerland income statement 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 % change Switzerland system sales1 £5.4m £4.7m 14.0% Currency impact £0.2m Switzerland system sales CHF 8.0m CHF 7.0m 14.0% Switzerland LFL sales (CHF) 2.8% 2.9% Switzerland operating profit £(0.7)m £(0.4)m (87.2)%
Slide 30: Switzerland: strong mature store performance with continued investment
Switzerland: strong mature store performance with continued investment 14 corporate stores LFL sales up 2.8%1 1 relocation: Onex Investment in 3 new store openings: Alstetten Glatt Bern Profitability has improved in mature stores by over CHF 0.2m YOY Note: 1LFL adjusted for non-trading we
Slide 31: Good performance in H1 will provide a solid foundation for the second half
Good performance in H1 will provide a solid foundation for the second half 10%+ LFL sales growth for the seventh successive quarter in core UK business Significant progress in digital initiatives - sales now 77% of delivered sales and 10m+ Apps downloaded Record performance in 21 new stores op
Slide 32: Q&A
Q&A WE ARE & DOMINO'S 32
Slide 33: Appendices
Appendices Appendix 1: Reconciliation between operating profit and underlying operating profit Appendix 2: Capital expenditure Appendix 3: 10 year history: store counts, system sales and Group underlying operating profit Appendix 4: UK & ROI System sales and PBT growth Appendix 5: UK LFL b
Slide 34: Reconciliation between operating profit and underlying operating profit
Reconciliation between operating profit and underlying operating profit 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 Onerous leases - -126 Corporate stores 302 Property, plant and equipment 439 Impairments - 741 Restructuring and reorganisation costs -162 Other restructuring and one-off i
Slide 35: Capital expenditure
Capital expenditure 26 weeks ended 26 weeks ended 28 June 2015 29 June 2014 £m £m Maintenance 0.7 0.7 Expansionary UK Supply Chain Centres 0.1 0.1 HQ 0.2 0.5 DP Realty 0.1 0.0 Website/App Development 1.8 0.4 ERP 0.3 0.1 Germany 0.3 0.2 Switzerland 1.7 0.9 Total capex 5.2 2.9 35
Slide 36: 10 year history: store counts, system sales and operating profit
10 year history 1000 Store count 916 858 894 805 800 726 665 608 600 553 501 451 407 400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 System sales & Group underlying operating profit 1000.0 150.0 £m group underlying operatiing £m group system sales 766.6 130.0 800.0 668.8 110.0 598.6 60
Slide 37: UK & ROI System sales and PBT growth
UK & ROI System sales and PBT1 growth System sales & PBT1 growth £450.0 £40.0 417.0 £400.0 £35.0 365.6 34.6 £350.0 317.9 29.8 £30.0 £300.0 285.9 258.3 25.9 £25.0 23.3 Sales £m PBT £m £250.0 20.2 £20.0 £200.0 £15.0 £150.0 £10.0 £100.0 £50.0 £5.0 £0.0 £0.0 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 Sales
Slide 38: UK: LFL sales remain robust
UK: LFL sales remain robust 14.0% 12.9% 11.8% 12.0% 10.8% 10.4% 10.2% 9.9% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Q1 Q2 Q3 Q4 2014 2015 Note: 2015 Mature store group opened before 29th December 2013 38
Slide 39: UK: Product category growth
UK: Product category growth 80.0 2.0 2.1 75.0 1.1 3.0 70.0 Units m 65.0 78.2 60.0 69.9 55.0 50.0 2014 H1 Beverage Dessert Pizza Starter 2015 H1 39
Slide 40: UK: Store splits benefit DPG and franchisees
UK: Store splits benefit DPG and franchisees Sales benefit of splitting stores 80.0% increase sales over 4 years +80.0% Franchisee benefits Access to peripheral areas Defence against competitors Increasing penetration Larger take-out opportunity Lower delivery costs Marketing economies
Slide 41: Domino's outperforming the market
Domino’s outperforming the market QS Major Brands – YOY performance for YE Mar ‘15 Total Spend Domino's Pizza 7.6% 3.5% 11.1% Costa Coffee 6.2% 1.2% 7.6% KFC 3.4% 2.1% 5.6% Traffic Spend Pret A Manger 4.0% 1.0% 5.1% Burger King 4.3% 0.2% 4.4% Nandos 3.7% 0.8% 4.4% McDonald's 2.0% 2.1% 4.1% Pizza Hut