Domino's Pizza Enterprises Limited · ASX:DMP
Domino's Pizza Enterprises — H1 2016 Earnings Presentation
52 slides from Domino's Pizza Enterprises's earnings presentation, Feb 17, 2016
Slide 1: Half Year 2016 Market Presentation
For personal use only 03 JANUARY 2016 DON MEIJ - GROUP CEO & MANAGING DIRECTOR RICHARD CONEY – GROUP CFO ANDREW RENNIE – EUROPE CEO MAEL BARTH – FRANCE CFO
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ENTERPRISES : ICE THENETHERLANDS JAPAN GERMANY FOr personal use Only
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For personal use only (1) H1 16 Underlying comparison to H1 15 statutory results 3
Slide 4: H1 16 results highlights
For personal use only Network sales up 28.5%, +$204.2m to $919.6m Revenue up 29.6%, +$101.7m, to $445.3m Strong organic growth in all regions has resulted in underlying EBITDA up 44.9% to $87.0m Underlying NPAT up 56.7% to $45.6m Underlying EPS 52.4c, up 55.0% (statutory EPS up 47.3%) In
Slide 5: Network sales by region
For personal use only 1,480 1,400 1,249 1,200 1,000 920 849 805 800 746 764 715 $m 673 600 576 ANZ’s strong SSS growth largely driven by the 437 continued success of the $5 Cheaper Every Day 401 404 412 400 365 382 campaign and GPS Driver Tracker (GPSDT) Europe’s solid SSS growth driven by effec
Slide 6: Store rollout progress
For personal use only ANZ on track to open more than 50 stores for the full year with 15 new stores opened in the first half (there were 4 closures)(1) Europe on track to open in excess of 60 stores (excluding acquisitions) for the full year with 17 new stores opened in the first half (there wer
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Slide 8: EBITDA growth by region
For personal use only ANZ delivered another strong half with EBITDA growth driven by double digit SSS. On track to achieve 38% EBITDA margin within the next 3 years Europe continues to deliver very strong EBITDA growth, with 108.1% achieved in the first half. Margin growth is expected to continu
Slide 9: Significant items and acquisition costs
For personal use only Joey’s and Domino’s Germany Acquisition costs Professional fees & other costs directly attributable to the Pizza Sprint Acquisition costs acquisitions TOTAL NPBT IMPACT 9
Slide 10: Underlying EPS growth
For personal use only 74.2 Underlying EPS 52.4c, up 55.0% on H1 15 (statutory EPS 49.8c up 47.3%) attributable to organic growth within existing DPE system H2 H1 16 underlying EPS CAGR of 28.6% in the last nine years 50.5 40.4 (three year underlying EPS CAGR of 38.2%) 39.1 37.2 H2 29.1 30.0 H2 H
Slide 11: Cash flow
For personal use only Strong operating cash flows partially affected by the timing of supplier payments, particularly in Japan Net capex/investments grew in line with guidance as we continued to invest in digital platforms and the accelerated roll out of stores in Japan Proceeds from sale of s
Slide 12: Balance sheet
For personal use only Increase in PP&E and Goodwill of $55.4m due to the accelerated rollout of stores in Japan, digital investment and FX translation Increase in short term borrowings of $16.5m is predominantly a result of the timing of half year close (movement in working capital facility) S
Slide 13: Key financial ratios
For personal use only Net Debt to Equity has improved due to higher profits in H1 16 with no material increase in long-term borrowings Interest Coverage, Return on Equity and Return on Capital Employed have increased as a result of strong profits in H1 16 13
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Slide 15: Australia/New Zealand highlights
For personal use only AUSTRALIA/NEW ZEALAND Successful rollout of GPS Driver Tracker in all ANZ stores continues to push double digit SSS, improve customer ratings and add operational efficiencies Cheaper Everyday campaign continues to contribute to strong SSS SMS Ordering campaign helped driv
Slide 16: Australia/New Zealand highlights
For personal use only AUSTRALIA/NEW ZEALAND Electric Push Bike roll out gathering momentum with 300 bikes operating in stores with a plan to double this by the end of the year Franchise profits at record high, driven by strong SSS and improved labour efficiencies Focused on delivering more ope
Slide 17: Australia/New Zealand network sales
For personal use only AUSTRALIA/NEW ZEALAND $439.9m 13.8% 11.8% $355.0m 10.6% 8.7% $306.6m $273.4m $279.0m 6.9% 5.6% 4.5% 2.6% 0.4% 2012 2013 2014 2015 2016 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 Network sales growth of 13.8% SSS is primarily driven by the success of GPSDT and the C
Slide 18: Australia/New Zealand campaigns and technology
For personal use only AUSTRALIA/NEW ZEALAND Launched ‘More Than Just Pizza’ campaign on 1st February highlighting improvements we have made to all aspects of our business Launched 15 & 20 Minute Service Guarantees in all stores. National promotion scheduled for March Continue to invest more th
Slide 19: Australia/New Zealand menu and costs
For personal use only AUSTRALIA/NEW ZEALAND Continuing our menu development, further upgrading the quality of our ingredients, and enhancing our great sides and desserts range Our drive to be artificial free, colour free and preservative free within two years is progressing well ahead of plan
Slide 20: Slow where it matters, fast where it counts
For personal use only AUSTRALIA/NEW ZEALAND Goal for the next 3-5 years is to implement delivery of pizzas in 10-12 minutes and have pick-up pizzas ready in 4-5 minutes Slow where it matters – No compromise to quality, safe delivery and friendly service at the door Fast where it counts – New f
Slide 21: DLAB innovation lab
For personal use only AUSTRALIA/NEW ZEALAND DPE’s new international innovation lab, DLAB, will evolve from launch stage into a valuable and dynamic part of the business The DLAB will be developing and trialling new ideas that will disrupt and revolutionise the QSR and Retail space Innovations
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Slide 23: Europe highlights
For personal use only EUROPE Strong SSS linked to digital growth in the Netherlands and Belgium supported by higher quality marketing Pulse rollout successfully completed in Belgium and commenced rollout in France Record digital growth in all three countries Franchisee profitability at recor
Slide 24: Europe network sales
For personal use only EUROPE €160.7m 8.5% 7.5% 7.5% €132.1m €115.7m €108.4m 5.3% 4.9% €95.3m 4.6% 4.0% 2.3% 0.7% 2012 2013 2014 2015 2016 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 Strong SSS in all three countries has delivered the highest Europe region SSS of 8.5% in the last 6 years
Slide 25: Europe outlook and rollout
For personal use only EUROPE Pulse and the OneDigital Platform roll out in France expected to be completed by August 2016 with 90% achieved by year end Completion of the new, highly automated, French commissary due in August 2016 On schedule to open in excess of 60 new stores in FY16. This wil
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Slide 27: Pizza Sprint acquisition
For personal use only Pizza Sprint deal completed on 26th January 2016 Pizza Sprint is a leading independent pizza chain operating in western France, with 89 stores(77 Franchised, 12 Corporate owned) First stores start converting early March 2016 and completion expected within 6-9 months Tra
Slide 28: Joey's Pizza and German joint venture
For personal use only Joey’s Pizza and German joint venture transactions completed Joey’s Pizza is the largest pizza delivery chain in Germany by network sales and number of stores. Comprising of 212 stores (209 franchise stores, 3 corporate owned stores) We expect stores to start converting i
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Slide 30: Japan highlights
For personal use only JAPAN Opened 48 stores during the first half of the year, 38 corporate and 10 franchise Celebrated the 400th store milestone and finished the first half with 432 stores Franchised stores are now 28% of the system reaching 119 stores “Our Can Do! Partners” franchising pr
Slide 31: Japan highlights
For personal use only JAPAN Relocated 27 stores to pick up friendly locations, along with remodeling of two stores Record digital sales achieved Growing pick up sales: 46% of network sales, versus 42% last year 110 stores set new monthly sales record in December; 127 stores set new weekly re
Slide 32: Japan network sales
For personal use only JAPAN 14.4% ¥ 20,693 m(2) ¥ 16,428 m 7.8% ¥ 9,424 m(1) 2.2% 1.3% 2014 2015 2016 -1.2% H1 14 H2 14 H1 15 H2 15 H1 16 Network sales grew 26.0% during the first half of the financial year (1) Japan sales in H1 14 only relates to the DPE ownership period from 3rd Sep 2013 to 29th
Slide 33: Japan outlook
For personal use only JAPAN National launch of GPS Driver Tracker in Japan set for July 2016 On schedule to open our 500th store by end of 2016 Roll out of Pulse point of sale system from March to June 2016 Implementation of DPE’s OneDigital due within 2016 Relocation of 10 stores to pick
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Slide 35: Digital highlights
For personal use only Strong online sales growth achieved with new highs recorded in all six markets Rolled out a new public website, which saw a direct lift in online sales Record 22 digital projects released with a further 28 currently in the pipeline Implementing strategy to launch digita
Slide 36: Digital: Australia/New Zealand
For personal use only YoY online sales growth of 23.9% achieved for ANZ A market first, SMS Ordering was launched in Australia helping drive sales and providing a new level of convenience to customers Exceeded 60% of Online Sales via Mobile, setting a new benchmark for the DPE group Launched
Slide 37: Digital: innovation
For personal use only Developed an online pretotype process for rapid and low cost testing of products and ideas Launched iTunes integration into GPS Driver Tracker providing a new revenue stream Added multi-tasking to the iPad App allowing customers the ability to track their order while comp
Slide 38: Digital: Netherlands and Belgium
For personal use only Netherlands YoY digital growth of 31.1% achieved Belgium YoY digital growth of 55.4% achieved Launched DPE’s new OneDigital group online ordering and website platforms leading to increased online sales Reinforced and strengthened internal digital team’s capabilities and
Slide 39: Digital: France
For personal use only France YoY digital growth of 33.0% achieved France continues to rollout DPE’s new group online ordering platform to more stores Strong online sales growth being recorded from stores converted to OneDigital platform Partnership with Bein Sports and Fox for an online prom
Slide 40: Digital: Japan
For personal use only Japan YoY digital growth of 10% achieved Pulse POS project is expected to be rolled out by the end of 2016 In a world first, during September 15, we launched online ordering on the nation’s largest social networking service “LINE” Exceeded 50% of online sales via mobile
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Slide 42: Product innovation: Australia/New Zealand
For personal use only AUSTRALIA/NEW ZEALAND Introduced Chef’s Best Prawn Range as an end of year summer celebration Refreshed the extra value range with the new Cheesy Garlic Pizza and Chili Beef pizza finished with a buffalo hot sauce The Global Development team added even more choice to the
Slide 43: Product innovation: Europe
For personal use only EUROPE Chicken popcorn and Burger Pizza were successfully launched in France providing customers with greater variety and choice Cheesy Bread with the iconic “Raclette” French Cheese recognising the importance of provenance and local produce Introduced Mini Doughnuts and
Slide 44: Product innovation: Japan
For personal use only JAPAN Extended the Chicken Dish range with a new garlic & mayo flavour The Mille Crepe Cake has proved a popular dessert for the winter months and end of year festivities Launched the Winter Quattro, featuring aged beef and crab gratin A new Pan Pizza was introduced in
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Slide 46: Store potential to 2025
For personal use only Australia/NZ Europe Japan Potential to 2025 900 Stores 2,500 Stores 850 Stores Post Conversion of Acquisitions 778 Stores 3rd January 2016 681 Stores 467 Stores 432 Stores Group potential remains unchanged at 4,250 stores by 2025 Europe added a further 311 stores following
Slide 47: Guidance and capex
For personal use only (1) Including investment activities from Pizza Sprint and German joint venture incl. Joey’s Pizza acquisition (2) Better than expected progress with German acquisition may result in lower organic store openings in Europe (3) Underlying growth 47
Slide 48: Current trading
For personal use only ANZ SSS growth has continued its strong momentum into the second half, lifted by digital sales growth, SMS ordering, “We’re no longer Domino’s Pizza, we’re Domino’s” and the new BBQ Pulled Beef and Bacon activity Increased marketing activity in France, strong new product la
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Slide 50: Summary
For personal use only Record sales, lead by digital innovation in Europe and ANZ, supported by record store openings in Japan resulted in strong earnings growth in the first half Strong margin growth was delivered in all three regions, as we continue to leverage benefits of scale “Slow where i
Slide 51: Outlook and upgraded guidance
For personal use only The acquisition of Pizza Sprint and Joey’s Pizza in Europe will also contribute to underlying earnings in the second half Great leadership in Europe is driving the successful digital roll out that has enabled progressive upgrades to our earnings The rollout of Pulse in Fr
Slide 52: Forward looking statements
For personal use only 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. Domino’s does not undertake any obligation to provide recipient
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