Domino's Pizza says sale of international businesses 'may take some time'

Domino's Pizza nudged its full-year dividend payout higher despite having reported lower like-for-like sales, a big drop in statutory profits and telling clients that disposals of its remaining international units "may take some time".

Despite the "uncertain" environment, for the 52 weeks ending on 29 December, the company posted a 4.8% rise in UK & Ireland system sales to reach £1,210.9m, with 32 new stores opening in the UK & Ireland, 29 of which were franchised.

Yet excluding so-called 'splits', like-for-like sales growth in the UK slipped from 4.6% in 2018 to 3.7%.

Company boss, David Wild, highlighted the contribution from the group's digital sales, which increased 8.8% and accounted for 91.1% of UK delivery sales, alongside a "good" performance from collection which rose 5.3% and remained a "significant opportunity" for Domino's.

On an underlying basis, earnings before interest and tax improved 1.7% to £105.3m, but statutory profits before tax on a continuing basis were 13.8% lower at £75.1m.

A £18.7m impairment charge was recorded over corporate stores operations in the UK, together with a £7.1m contribution into the eCommerce fund agreed with franchisees and £7.3m in various one-off costs, offset by a £9.0m revaluation of its put options over its investments in Norway and Sweden.

Net debt also increased, rising 14.4% to £232.6m or 1.99 times' the company's earnings before interest, tax, depreciation and amortisation on a continuing basis or 2.28 times' on a non-continuing basis.

The company attributed the jump in leverage to the timing of a £21m payment and Brexit related stockpiling.

Wild, who was soon due to retire, said "transactions" involving its international businesses remained the priority.

"We continue to prioritise transactions for our remaining International businesses, although expect that these may take some time as we ensure that we find the best owners for these businesses," he said.

Interim chairman Ian Bull added the recruitement of a new chair, chief executive officer, finance chief, reinforcing the core business and rebuilding the franchisee relationship to the list of priorities.

Tragically, the group's chief financial officer, David Bauernfeind, had died in an accident on 26 December.

The search for a new chair, who would oversee the selection process for a new chief executive officer, was "progressing" and the hiring of an interim CFO was said to be "continuing".

Regarding the outlook, beyond the sale of its international businesses, Domino's said: "The external environment hasn't been easy and, whilst parts of the UK and Ireland may become less cautious having formally left the EU, much remains uncertain as we go through the transition year.

"The potential impact from COVID-19 is difficult to determine, with the situation continuing to evolve.. We are monitoring this closely, and have established contingency plans."

The company also provided 2020 guidance for underlying depreciation and amortisation (£12-14m), underlying interest (roughly £6m), an underlying effective tax rate of about 18%, capital expenditures in a range of £25-30m and slightly lower net debt "excluding any cash implications of International transactions".

As of 0943 GMT, shares of Domino's Pizza were trading 2.69% lower to 296.80p.