DP Eurasia N.V Trading Update for the Year Ended 31 December 2019 (0511B)

TIDMDPEU

RNS Number : 0511B

DP Eurasia N.V

28 January 2020

 
 For Immediate Release   28 January 2020 
 

DP Eurasia N.V.

("DP Eurasia" or the "Company", and together with its subsidiaries, the "Group")

Trading Update for the Year Ended 31 December 2019

Solid growth with high double-digit growth in digital

 
                               For the year ended 
                                   31 December 
                            ----------------------- 
                                2019        2018      Change 
                            -----------  ----------  ------- 
                              (in millions of TRY, 
                                unless otherwise 
                                   indicated) 
 
 Number of stores               765          724        41 
 
 Group system sales (1) 
 Turkey                        845.7        736.1     14.9% 
 Russia                        503.3        373.5     34.8% 
 Azerbaijan & Georgia           21.2        15.7      34.2% 
 Total                        1,370.3      1,125.3    21.8% 
 
 Group system sales like-for-like 
  growth(2) 
 Turkey                        13.1%        9.3% 
 Russia (based on RUB)          0.7%        16.0% 
 Group(6)                      10.7%        10.3% 
 

Highlights

   --     The Board expects the full year Adjusted EBITDA(5) for 2019 to be in line with expectations 
   --     Management appointments in Russia - CEO, COO and CFO 

-- Like-for-like enhancing pricing measures implemented in Turkey during early 2019 highly successful

   --     Similar measures being implemented in Russia - starting in February 

-- 41 store openings for the Group - with 800(th) store in sight - pipeline for 2020 remains strong in line with prior guidance (Turkey 25 -30, Russia 40 - 60 stores)

   --     Group system sales growth of 21.8% driven by both Russia and Turkey 

o Turkish system sales growth of 14.9%

o Russian system sales growth of 34.8% (17.5% based on RUB)

   --     Group online system sales(4) growth of 39.8% 

o Turkish online system sales growth of 33.5%

o Russian online system sales growth of 49.0% (29.9% based on RUB)

-- Online delivery system sales(3) as a share of delivery system sales reached 70% for the year (2018: 61%)

Commenting on the update, Chief Executive Officer, Aslan Saranga said:

"We are pleased with our top line performance given the macroeconomic and competitive headwinds in our markets in 2019. We are particularly pleased to have recorded double-digit like-for-like growth in Turkey despite a slow start to the year. Our "Dürümos" wrap launch in the third quarter and the successful celebrity-endorsed advertising campaigns resulted in solid like-for-like in the second half of the year, surpassing 20% in the fourth quarter. Rapidly improving macro parameters in the fourth quarter were also a key catalyst to our success; however, the volatile situation beforehand was not conducive for store openings.

"It was a challenging year in Russia. Greater Moscow like-for-like performance was below plan due to new competitor store openings and increased aggregator activity. Issues with regional franchisees have been successfully resolved, but the store opening guidance has not been achieved. We have expanded our Russian marketing team and conducted an extensive marketing survey in 9 cities with 2,800 customers and updated our marketing and pricing strategy accordingly. Clearly defined measures such as cluster based pricing by region and store, building on the success in Turkey in H2 2019, will be in place starting in February to restore like-for-like growth. A targeted marketing relaunch is planned for Q1'2020 using a Russian celebrity for the first time. We have also started testing with one of the Russian aggregators in Q4'2019. We will share more on these measures at our preliminary results release. On the management front, we are pleased to announce three appointments which complete the Russian team: Mr. Mustafa Özgül, who served as the CFO of Russian Operations since 2014, will take over as the CEO of Russian Operations effective immediately. Additionally, Mr. Tarun Bhasin, a 20-year veteran of Domino's India who last served as President & COO, will join the business as the COO of Russian Operations as soon as his working permit is secured. He was an integral part of the team that took Domino's from 100 stores to 1,000 stores. Finally, Ms. Anna Masalova, who has most recently served as Finance Director of McDonald's Russia, has been appointed as the CFO of Russian Operations.

"Digital continues to drive our business forward. Online ordering as a percentage of delivery has reached 70%, up from 61% in 2018. We will also launch our loyalty programme in Russia in 2020, which is currently in testing phase.

"The Board remains confident in its growth strategy and expects the full year Adjusted EBITDA(5) for 2019 to be in line with expectations."

Enquiries

 
 DP Eurasia N.V. 
 Selim Kender, Chief Strategy Officer & 
  Head of Investor Relations                  [phone] 
 
 Buchanan (Financial Communications) 
 Richard Oldworth / Victoria Hayns / Tilly    [phone] 
  Abraham                                      [e-mail] 
 
 

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:   UK Toll Free: 08003589473 
                    UK Toll: [phone] 
                    Participant PIN code: 32873421# 
                    URL for international dial in numbers: 
                    http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf 
 

A recording of the conference call will subsequently be available at www.dpeurasia.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 765 stores (550 in Turkey, 203 in Russia, eight in Azerbaijan and four in Georgia as at 31 December 2019), and operates through its owned corporate stores (32%) and franchised stores (68%). 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. The Group has adapted the Domino's Pizza globally proven business model to its local markets.

Performance Review

 
 Store count                                  As at 31 December 
               ------------------------------------------------------------------------------ 
                              2019                                       2018 
                Corporate   Franchised    Total           Corporate   Franchised      Total 
 Turkey            123         427         550               137         398           535 
 Russia            121          82         203               101          78           179 
 Azerbaijan         -           8           8                 -           6             6 
 Georgia            -           4           4                 -           4             4 
 Total             244         521         765               238         486           724 
 
 

Delivery channel mix and online like-for-like growth

The following table shows the Group's delivery system sales(3) , 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 years ended 31 December 2019 and 2018:

 
                                           For the year ended 31 December 
                                 -------------------------------------------------- 
                                           2019                      2018 
                                 ------------------------  ------------------------ 
                                  Turkey   Russia   Total   Turkey   Russia   Total 
 Store                            32.0%    18.0%    27.8%   42.4%    23.9%    37.1% 
                Group's online 
 Online             platform      28.5%    80.5%    47.0%   30.2%    76.1%    44.7% 
           Aggregator             35.7%     1.5%    22.8%   24.2%      -      16.1% 
          Total online            64.2%    82.0%    69.9%   54.4%    76.1%    60.8% 
 Call centre                       3.8%      -      2.1%     3.1%      -      2.1% 
 Total                             100%     100%    100%     100%     100%    100% 
 

The following table shows the Group's online like-for-like growth(2) , broken down by the Group's two largest countries in which it operates, for the years ended 31 December 2019 and 2018:

 
                                             For the year ended 
                                                 31 December 
                                           --------------------- 
                                              2019        2018 
                                           ----------  --------- 
 Group online system sales like-for-like 
  growth(2) 
 Turkey                                       32.6%      33.7% 
 Russia (based on RUB)                        15.4%      43.5% 
 

Notes

(1) System sales are sales generated by the Group's corporate and franchised stores to external customers and do not represent revenue of the Group.

(2) 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).

(3) Delivery system sales are system sales of the Group generated through the Group's delivery distribution channel.

(4) Online system sales are system sales of the Group generated through its online ordering channel.

(5) Adjusted EBITDA is not defined by IFRS. Adjusted EBITDA excludes income and expenses which are not part of the normal course of business and are non-recurring items, consisting of restructuring costs, IPO-related expenses and share based incentives. Management uses this measurement basis to focus on core trading activities of the business segments and to assist it in evaluating underlying business performance.

(6) Group like-for-like growth is a weighted average of the country like-for-like growths based on store numbers as described in Note (2).

Appendices

Exchange Rates

 
                          For the year ended 31 December 
            ---------------------------------------------------------- 
                        2019                          2018 
            ----------------------------  ---------------------------- 
 Currency    Period End   Period Average   Period End   Period Average 
            -----------  ---------------  -----------  --------------- 
 EUR/TRY       6.651          6.348          6.028          5.679 
 RUB/TRY       0.096          0.087          0.075          0.076 
 EUR/RUB       69.341         72.513         79.461         73.950 
 

Delivery - Take away / Eat in mix

 
                             For the year ended 31 December 
                   -------------------------------------------------- 
                             2019                      2018 
                   ------------------------  ------------------------ 
                    Turkey   Russia   Total   Turkey   Russia   Total 
 Delivery           63.8%    62.2%    63.1%   63.0%    60.2%    62.0% 
 Take away / Eat 
  in                36.2%    37.8%    36.9%   37.0%    39.8%    38.0% 
 Total(2)            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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

END

TSTFLFEELAIDFII

(END) Dow Jones Newswires

January 28, 2020 02:00 ET (07:00 GMT)