Domino's Pizza boosts FY14 earnings despite weaker German performance

26th Feb 2015 07:53

Britain's most popular online pizza store, Domino's Pizza Group, reported an annual increase in earnings in 2014 and registered strong UK like-for-like sales growth but noted challenges in the German market.Domino's, which operates mainly in the UK but also has smaller businesses in Ireland, Switzerland and Germany, reported strong growth with like-for-like sales growth of 11.3% across UK stores compared to 7.0% in 2013. Group revenue last year rose by 10.3% to £294.4m from £266.8m in 2013, while underlying operating profit increased by 15.7% to £55.5m last year from £47.9m in 2013.That led to a 10.8% increase in earnings per share to 26.6p last year from 24.0p in 2013, leading the company to up its final dividend by 10.1% to 9.69p per share from 8.80p per share in 2013, bringing the total dividend for 2014 to 17.50p per share to 15.90p per share in 2013.The company said it made progress in Ireland and Switzerland but continued to struggle in Germany, where it made an operating loss of £7.3m. "Our German business has continued to have a difficult year with like-for-like sales down 4.9%, as we change our operating framework and focus on developing a store level economic model that is attractive to franchisees, said the company's chief executive David Wild."That said, the pizza maker continued to expand its presence in key markets by opening 44 new stores opened last year, raising the total number of stores to 894 in four countries by the end of 2014. "We are well positioned to continue our expansion and implement our plans for the future growth of the Group, backed by our strong balance sheet and low financial gearing," added Wild.Broker N+1 Singer notes that with the shares trading on a price-to-earnings ratio that's 22 times forward earnings, Domino's is not cheap. "But with the UK business continuing to defy gravity and management seemingly getting to grips with Germany, we envisage investor sentiment to remain positive and for the shares to kick-on in the day's ahead," the broker added.