Trading Update

RNS Number : 8354M

DP Eurasia N.V

26 May 2022

 

For Immediate Release

26 May 2022

DP Eurasia N.V.

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

Trading Update for the four months ended 30 April 2022 (the "Period")

Significant growth achieved in testing macro environment

	For the period ended 30 April
	2022	2021		Change
	(in millions of TRY, unless otherwise indicated)
Number of stores (1)	816	775	41
Group system sales (2)
Turkey	726.6	469.0	54.9%
Russia	283.0	180.6	56.7%
Azerbaijan & Georgia	25.9	12.1	114.2%
Total	1,035.5	661.6	56.5%
Group system sales like-for-like growth(3)
Group(4)	36.1%	49.4%
Turkey	47.6%	62.1%
Russia (based on RUB)	-1.5%	13.1%

Financial Highlights

· Group system sales increased 56.5%, with a like-for-like growth of 36.1%, driven by excellent demand in Turkey.

· Growth achieved despite the challenging comparatives in both Turkey and Russia.

· Group online system sales ⁽⁵⁾ growth of 61.0%.

o  Turkish online system sales growth of 61.9%.

o  Russian online system sales growth of 58.3% (-4.7% based on RUB).

· Online delivery system sales further increased to 82.1% (April 2021: 77.3%) as a share of delivery system sales ⁽⁶⁾, reflecting DP Eurasia's robust positioning for the online ordering channel.

· 12 new store openings in Turkey in the Period (all but one by the existing franchisees) with a strong 2022 pipeline meaning the momentum of last year, which had seen the highest level of store openings in Turkey since 2014, is expected to be maintained.

· Good liquidity position at Period-end with TRY 67.8 million cash and an undrawn bank facility of TRY 172.6 million.

· Following launch of new COFFY concept in 2021, performance has been very strong. Currently trading from 12 stores by Period-end, seven of which are franchised, while more openings are expected in the coming months. While COFFY remains in its early stages, having launched in 2021, the Group believes it represents an outstanding growth opportunity.

Corporate Highlights

· Jubilant Foodworks Limited ("JFL"), through its wholly owned subsidiary Jubilant Foodworks Netherlands B.V., increased its shareholding to 42.2% by the end of April 2022, up from 40.3% at the end of 2021, via open market purchases.

· Extraordinary General Meeting convened on 13 April 2022 and voted through the proposal to embed takeover protection for minority shareholders in the articles of association. With this protection, the requirement to launch a mandatory offer will be applicable to any investor which acquires 50% or more of the Company's issued share capital.

· On 25 April 2022, the Group announced the intended appointment of an independent non-executive director (INED) at the AGM in June 2022. Appointment of a second INED is also in advanced stages. As previously shared, JFL has agreed to reduce its representation from three board directors to two following the 2022 AGM.

· In line with the statement during the release of 2021 preliminary results and given the prevailing uncertainties of inflation and the wider macro-environment, the Group is still unable to provide meaningful guidance for the full year ending 31 December 2022.

· IAS 29 'Financial Reporting in Hyperinflationary Economies' will be applicable for Turkey starting from 30 June 2022. In DP Eurasia's case, this will be implemented starting with the first half trading update to be released in July 2022.

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

"We have started the year well despite the headwinds of high inflation and geopolitical tensions. Owing to management's experience in navigating volatility, Group system sales remained in strong growth at 56.5% with a solid 36.1% like-for-like performance versus a year ago.

"Our Turkish operations were robust with system sales growth of 54.9%, or 47.6% LFL.We are pleased with this LFL performance, given it is set against a tough prior comparative. 2021 was enhanced by a pandemic-driven boost to deliveries and a tailwind from temporary VAT reduction to 1% from 8%, while 2022 has taken in an additional Ramadan impact of 11 days, making the year-on-year comparison less favourable. While responding to high inflation via price increases on sales to both consumers and franchisees, we remain committed to providing the best value for money proposition and ensuring our franchisees remain profitable. We believe that we are well positioned to succeed in this environment and deliver long-term sustainable growth.

"Our online channel continues to be the main driver behind our solid growth rates.  In Turkey, like-for-like growth for online system sales was 55.8%, carrying the share in Turkish delivery system sales to almost 80%. This corresponded to more than six percentage point increase over the last twelve months and is a composition that supports our costumer centric approach as we gain more insight from their purchases and accordingly develop our tailor-made offerings.

"In Russia, we have returned a flat like-for-like performance as a result of a strong comparable period and the sustained conflict in the region. However, trends improved since our preliminary results release and our average like-for-like growth in April was 8%. The online system sales share increased to 93.6% delivering around one and a half percentage point increase. We continue to monitor the situation in the region closely while the safety and welfare of all the Group's employees and customers remains our primary priority. The Group has been focused on optimising the existing store coverage areas in Russia, resulting in closure of four stores during the first four months of the year.  

"Product innovation continued in 2022. In Turkey, we introduced Cheddarlı Dev Sosisli pizza as well as new side offerings, such as the extension of the oven-baked bread line with new toppings, and the renovation of the Döner (shawarma) wrap range. Turkey also extended its entry-price offerings by adding two topping pizzas (Kantin and Favori İkili) to the product range. With these developments, we increased the segments from four to five, enhancing the variety our offerings.

"The strong performance in Turkey is continuing to generate a very robust franchisee demand.  We opened 12 new stores in Turkey during the first four months. Given our strong pipeline, we remain confident that 2022 will be another solid year for store growth.

"Our own-branded COFFY concept that was launched last year has performed extremely well so far. I am personally very excited for the future growth prospects for COFFY and believe it has the ability to make a considerable contribution to our investment story in years to come."

Enquiries

DP Eurasia N.V.
İlknur Kocaer, CFA - Investor Relations Director	[phone]
Buchanan (Financial Communications)
Richard Oldworth / Toto Berger / Verity Parker	[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: 83704319# URL for international dial in numbers: https://events- f tp.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 816 stores (617 in Turkey, 184 in Russia, 10 in Azerbaijan and five in Georgia as of 30 April 2022) and operates through its owned corporate stores (24%) and franchised stores (76%). 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 of 30 April
	2022				2021
	Corporate	Franchised	Total		Corporate	Franchised	Total
Turkey	100	517	617		104	466	570
Russia	92	92	184		116	76	192
Azerbaijan	-	10	10		-	9	9
Georgia	-	5	5		-	4	4
Total	192	624	816		220	555	775

Delivery channel mix and online like-for-like growth

The following table shows Group delivery system sales ⁽⁶⁾ , broken down by ordering channel and by the Group's two largest operational geographies, as a percentage of delivery system sales for the periods ended 30 April 2022 and 2021:

		For the period ended 30 April
		2022			2021
		Turkey	Russia	Total	Turkey	Russia	Total
Store		19.8%	6.3%	17.6%	26.2%	7.7%	22.4%
Online	Group's online platform	24.8%	72.9%	37.8%	26.6%	70.5%	37.8%
	Aggregator	55.0%	20.8%	44.3%	46.9%	21.9%	39.5%
	Total online	79.8%	93.6%	82.1%	73.4%	92.3%	77.3%
Call centre		0.4 %	-	0.3 %	0.4 %	-	0.3 %
Total		100%	100%	100%	100%	100%	100%

The following table shows the Group's online like-for-like growth ⁽³⁾ , broken down by the Group's two largest operational geographies, for the periods ended 30 April 2022 and 2021:

	For the period ended 30 April
	2022		2021
Group online system sales like-for-like growth(3)
Group(4)	42.7 %	77.8 %
Turkey	55.8 %	97.6 %
Russia (based on RUB)	-0.4 %	21.6 %

Liquidity

The Group continues to have a strong liquidity position with TRY 67.8 million of cash and access to an additional banking facility of TRY 172.6 million.

The Group's sufficient liquidity position enables it to pre-pay its bank borrowings in Russia, despite the recent devaluation of TRY, if required. The Group obtained a waiver from Sberbank with respect to its covenants for all four quarters of 2022 and is in negotiations to reset the covenants or repay the remaining loan. The principal outstanding amount under the Sberbank loan currently amounts to RUB 0.7 billion, of which RUB 0.02 billion is supported by a cash collateral deposit.

Notes

⁽¹⁾ Excluding COFFY stores

⁽²⁾ System sales are sales generated by the Group's corporate and franchised stores to external customers and do not represent revenue of the Group.

⁽³⁾ 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).

⁽⁴⁾ Group like-for-like growth is a weighted average of the country like-for-like growths based on store numbers as described in Note (3).

⁽⁵⁾ Online system sales are system sales of the Group generated through its online ordering channel.

⁽⁶⁾ Delivery system sales are system sales of the Group generated through the Group's delivery distribution channel.

Appendices

Exchange Rates

	For the period ended 30 April
	2022			2021
Currency	Period End	Period Average		Period End	Period Average
EUR/TRY	15.545	15.698		9.909	9.100
RUB/TRY	0.202	0.167		0.109	0.100
EUR/RUB	74.559	93.460		90.151	89.983

Delivery - Take away / Eat in mix

	For the period ended 30 April
	2022			2021
	Turkey	Russia	Total	Turkey	Russia	Total
Delivery	76.6%	77.9%	76.7%	82.8%	78.8%	81.5%
Take away / Eat in	23.4%	22.1%	23.3%	17.2%	21.2%	18.5%
Total	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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