FRANCHISING | Staff Reporter, UK

Domino's Pizza Group's profits hit by "growing pains"

The chain says 2018 was a "mixed year".

Domino’s Pizza Group has released its preliminary results for FY 2018, with system sales climbing 9% compared to a comparable 52-week period the previous year to almost £1.3 billion. Same-store sales for its UK system rose 4.6%.

However, pre-tax profits dropped to £61.9 million from £79.6 million. Underlying profits, which do not include charges of £31.5 million relating mainly to international impairments, UK supply chain transformation and integration costs, dipped by 1.1% to £93.4 million.

The group said it experienced “growing pains” internationally in a “mixed year”, noting that its performance in international markets was worse than it had anticipated last year amid a “number of challenges”. Whilst Iceland and Germany were profitable, businesses in Switzerland, Norway and Sweden continued to report losses. Domino’s UK and Ireland units, meanwhile, performed stronger.

"2018 was a mixed year. In the UK and Ireland, which account for around 90% of the business, we extended our excellent track record of growth and cash generation, responding well to the very challenging environment for the casual dining market," Domino's Pizza Group CEO David Wild said.

"Our franchisees opened 59 new stores, creating more than 2,000 jobs and sold a record 102 million pizzas. We also continued investing for future growth in digital and by successfully completing our new Supply Chain Centre in Warrington, our most significant investment to date, which supports our target of 1,600 stores in the UK."

Wild maintains that the group continues to have an appetite for international expansion.

"These are all good markets, with more than 100 million population, good appetites for pizza and little, if any, global brand competition. This is why we have strengthened our management teams and are committing disciplined capital to support future development. We expect an improved performance from International, with the business targeted to break even this year," he added.

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