Trading Update - Strong top line growth

RNS Number : 3053N

DP Eurasia N.V

17 January 2019

 

For Immediate Release

17 January 2019

DP Eurasia N.V.

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

Trading Update for the Year Ended 31 December 2018

Strong top line growth driven by network expansion, online growth and continuous focus on innovation

	For the year ended 31 December
	2018	2017	Change
	(in millions of TRY, unless otherwise indicated)
Number of stores	724	643	81
System Sales (1)
Turkey	736.1	645.6	14.0%
Russia	373.5	205.4	81.8%
Azerbaijan & Georgia	15.7	8.7	80.2%
Total	1,125.3	859.8	30.9%
Like-for-like System Sales growth(2)
Turkey	9.3%	10.0%
Russia (based on RUB)	16.0%	28.9%

Highlights

·     The Board expects the full year Adjusted EBITDA⁽⁵⁾ for 2018 to be in line with expectations

·     Record number of store openings for the Group (81) and Russia (58) - surpassing the 700^th store mark for the Group, bringing the total store count to 724 - pipeline for 2019 remains strong

·     Group system sales growth of 30.9% driven by strong progress in both Russia and Turkey

o  Turkish system sales growth of 14.0%

o  Russian system sales growth of 81.8% (48.7% based on RUB)

·     Group online system sales⁽⁴⁾ growth of 59.6%

o  Turkish online system sales growth of 36.4%

o  Russian online system sales growth of 112.8% (74.0% based on RUB)

·     Online delivery system sales⁽³⁾ as a share of delivery system sales reached 60.8% for the year (2017: 51.8%)

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

"We are extremely pleased to announce another year of strong top line performance.  Along with the robust like-for-like performance, we have been continuously adding to our store count reaching 724 total stores for the Group at the end of 2018.  The franchising and geographical expansion efforts in Russia have been a strong testament to our business model; we are now in 12 cities outside of Greater Moscow and our franchise store mix has reached 44% from a standing start two years ago.  We are also well on our way to eliminating our Turkish net debt and exposure to the associated high local interest rate as at the end of 2018.

"On the technology side, the new website launched in Turkey is experiencing higher conversion rates and the new Russian website will go live imminently. We also launched the GPS Tracker ad campaign nationwide in Turkey.  We continue to adapt our offering to remain competitive; launching new pizzas and side dishes in both our main markets in the new year in addition to introducing a new pricing scheme in Turkey to help combat the high inflation operating environment.

"The Board remains confident in its growth strategy and expects the full year Adjusted EBITDA⁽⁵⁾ for 2018 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	[phone] [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: 95451347# URL for international dial in numbers: http://events.arkadin.com/ev/docs/FEL_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 724 stores (535 in Turkey, 179 in Russia, six in Azerbaijan and four in Georgia as at 31 December 2018), and operates through its owned corporate stores (33%) and franchised stores (67%). 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
	2018				2017
	Corporate	Franchised	Total		Corporate	Franchised	Total
Turkey	137	398	535		142	372	514
Russia	101	78	179		99	22	121
Azerbaijan	-	6	6		-	5	5
Georgia	-	4	4		-	3	3
Total	238	486	724		241	402	643

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 2018 and 2017:

		For the year ended 31 December
		2018			2017
		Turkey	Russia	Total	Turkey	Russia	Total
Store		42.4%	23.9%	37.1%	48.0%	33.3%	45.0%
Online	Group's online platform	30.2%	76.1%	44.7%	25.1%	66.7%	34.5%
	Aggregator	24.2%	-	16.1%	22.7%	-	17.3%
	Total online	54.4%	76.1%	60.8%	47.8%	66.7%	51.8%
Call centre		3.1%	-	2.1%	4.2%	-	3.2%
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 2018 and 2017:

	For the year ended 31 December
	2018	2017
Group online like-for-like growth(2)
Online system sales(4)
Turkey	33.7%	37.7%
Russia (based on RUB)	43.5%	78.5%

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.

Appendices

Exchange Rates

	For the year ended 31 December
	2018			2017
Currency	Period End	Period Average		Period End	Period Average
EUR/TRY	6.028	5.679		4.516	4.116
RUB/TRY	0.0753	0.0761		0.065	0.062
EUR/RUB	79.461	73.950		68.867	65.901

Delivery - Take away / Eat in mix

	For the year ended 31 December
	2018			2017
	Turkey	Russia	Total	Turkey	Russia	Total
Delivery	63.0%	60.2%	62.0%	63.0%	60.2%	62.2%
Take away / Eat in	37.0%	39.8%	38.0%	37.0%	39.8%	37.8%
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.

 

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