REG - DP Eurasia N.V - Trading Update

DP Eurasia NVAnnouncement

28/11/2023 07:00

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RNS Number : 8111U  DP Eurasia N.V  28 November 2023

   28 November 2023

 

DP Eurasia N.V.

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

Trading Update for the ten months ended 31 October 2023 (the "Period") ((1)
(2))

(millions of TRY, unless otherwise indicated)

                                          For the period ended 31 October
 Number of stores                         2023              2022              Change
 Turkey (Domino's)                        678               637               41
 Turkey (COFFY)                           67                22                45
 Azerbaijan                               10                10                -
 Georgia                                  6                 5                 1
 Total continuing operations ((3))        761               674               87

 Group system sales (after IAS 29) ((4))  2023              2022              Change  Change

                                                                                      (pre-IAS 29)
 Turkey                                   5,772.3           4,283.2           34.8%   105.9%
 Azerbaijan                               99.9              99.8              0.0%    51.3%
 Georgia                                  68.1              52.4              30.0%   94.4%
 COFFY                                    263.9             66.1              299.3%  499.1%
 Total continuing operations              6,204.2           4,501.5           37.8%   110.6%

 

 

 

 System sales LfL growth((5))  (after IAS 29)      (pre-IAS 29)
                               2023      2022      2023     2022
 Turkey                        30.0%     -8.2%     98.1%    58.3%
 Azerbaijan (based on AZN)     7.7%      3.7%      7.7%     3.7%
 Georgia (based on GEL)        5.0%      15.1%     5.0%     15.1%
 Total continuing operations   29.4%     -7.8%     95.7%    57.1%

 

 

Highlights

·     Strong overall performance with Group system sales for continuing
operations up 37.8% (pre-IAS 29: 110.6%) or 29.4% on a LfL basis.

·      Delivered excellent LfL growth in Turkey of 30.0% amid a
sustained inflationary environment, reflecting our ongoing focus on network
expansion, strategic pricing, product and service innovation.

·      Azerbaijan and Georgia delivered LfL growth of 7.7% and 5.0%
respectively (in local currencies).

·     Online delivery system sales in Turkey increased to 84.2% (2022:
80.6%) as a share of delivery system sales((6)), reflecting robust positioning
for the online ordering channel as Turkish online system sales grew by a solid
41.6% (pre-IAS 29: 117.8%). Like-for-like growth was also very strong at 37.4%
(pre-IAS 29: 110.8%).

·     Net new store opening momentum has been maintained:

o  41 Domino's Pizza openings in Turkey year-on-year, reflecting the strong
demand profile. In 2023, 23 net stores have been opened in Turkey so far.
Given the accelerated pace of openings, we are confident to deliver our 35-40
net store guidance by FY23.

o  The COFFY network continues to grow rapidly. It has reached 67 stores, an
increase of 45 year-on-year with 38 net openings in the current financial
year. We are well on track with our guidance of 50-60 net COFFY openings in
FY23.

·     The growth opportunity for COFFY remains significant, with
excellent market dynamics in Turkey for the coffee sub-segment. COFFY
delivered TRY 264 million to Group system sales, up 299%.

·     Liquidity position as of 31 October 2023: TRY 402 million cash and
an undrawn bank facility of TRY 523 million. The Group paid off DP Russia's
external debt of 159 million TRY out of existing cash resources.

 

Outlook

·     The Group continues to trade in line with its formal guidance for
FY23, which is set out below.

·     FY23 guidance for LFL growth, store openings and capital
expenditure has been maintained and is as follows:

 

  2023 guidance*
 LfL growth rate                      High teens

                                      (pre IAS 29: 80-90%)
 Domino's Pizza net store openings    35 - 40
 COFFY net store openings             50 - 60
 Capital expenditure                  TRY 200 millon

                 *Russia excluded

 

·     The Group plans to disclose FY24 guidance within its preliminary
results announcement in April 2024.

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

 

"Strong trading momentum has been maintained and we remain dedicated to our
well-designed, targeted strategy. Execution of this enables us to continue to
deliver solid growth, as we focus on three core areas - strategic pricing and
product innovation, continued digital innovation, and operational efficiencies
to generate sustainable profitability.

 

"We are pleased to report sustained like-for-like growth well above inflation
as well as acheiving continued network expansion while navigating geopolitical
and macro uncertainties. Our strategy enables us to combat the high levels of
volatility in the regions in which we operate and, as Q4 progresses, we are
seeing the impact of our efforts becoming increasingly visible in terms of
volume generation and customer acquisition.

 

"Our product innovation capabilities remain integral to support our strategic
objectives. In October, we successfully launched the Domdom Burger, ensuring
it took centre stage on our delivery channels via tailored campaigns. We have
positioned it at a highly affordable price point of TRY50 (less than USD$2).
This led to a successful launch and contributed towards an increase in overall
product mix and volume. The launch of the Domdom burger reflects our
commitment to affordability - ensuring that we have suitable products at the
lower price threshold allows us to continue to service demand from a very
diverse range of consumers.

"Elevating the end-to-end customer experience across all brands remains a
crucial element of our strategy. We continue to improve the online proportion
of our sales, with digital innovation an important enabler for enhancing the
customer experience and solidifying our robust online position. We have
increased the share of online ordering in takeaway this financial year while
maintaining attractive pricing, enabling us to reduce cost per order.

"We retain a fundamental commitment to ensuring franchisees remain profitable.
As a result, franchisee demand for both Domino's Pizza and COFFY continues to
be very healthy. We have a strong pipeline of new sites and are confident that
we will deliver on our 2023 store opening guidance as well as embarking on
another solid year of network expansion in 2024.

"Demand for COFFY remains very strong with improving sales performance. Its
distinctive value proposition continues to attract new consumers. COFFY's main
growth driver will be the opening of new stores, predominantly through
franchising and with various store concepts that fit in with local
circumstance.

 

"To uphold our commitment to consumers, we will continue to prioritise the
development of new, fashionable products and creating app-first digital
experiences. Recognising that the coffee business is a new venture for us, we
will invest in essential processes and capabilities while striving to attain
our ambitious targets.

 

"This has been another excellent period for the Group, and we look forward to
a strong end to the financial year."

 

Enquiries

 DP Eurasia N.V.
 İlknur Kocaer, CFA - Investor Relations Director   +90 212 280 9636

 Buchanan (Financial Communications)
 Richard Oldworth / Toto Berger / Verity Parker     +44 20 7466 5000

                                                    dp@buchanan.uk.com (mailto:dp@buchanan.uk.com)

 

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 dial-in  UK-Wide: +44 (0) 33 0551 0200

                          UK Toll Free: 0808 109 0700

 Password:                Quote 'DP Eurasia Trading Update'

 

For further details, please contact Buchanan on +44 20 7466 5000
/ dp@buchanan.uk.com (mailto:dp@buchanan.uk.com) .

 

 

Notes to Editors

 

DP Eurasia N.V. is the exclusive master franchisee of the Domino's Pizza brand
in Turkey, 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. The Group offers pizza
delivery and takeaway/ eat-in facilities at its 694 stores (678 in Turkey, 10
in Azerbaijan and 6 in Georgia) as of 31 October 2023 and operates through its
owned corporate stores (12%) and franchised stores (88%). In addition to its
pizza delivery business, the Group also has its own coffee brand, COFFY, which
trades from 67 stores at period-end, 52 of which are franchised. 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.

 

In line with the announcement on 21 August 2023, the Company has initiated the
steps to file for DP Russia's bankruptcy. This was preceded by the
announcement on 28 December 2022, which confirmed that the Company was
evaluating its presence in Russia, the impact of sanctions and its continuing
ability to serve its customers in Russia. In this connection, the Russian
segment was classified as discontinued operations within the Company's audited
financial statements for the year ended 31 December 2022 and also within the
(unaudited) financial statements for the period ended 30 June 2023.

 

Performance Review

 Store count        For the period ended 31 October
                    2023                                 2022
                    Corporate  Franchised  Total         Corporate  Franchised  Total
 Turkey (Domino's)  82         596         678           93         544         637
 Azerbaijan         -          10          10            -          10          10
 Georgia            -          6           6             -          5           5
 COFFY              15         52          67            7          15          22
 Total              97         664         761           100        574         674

 

Sales channel mix

                                       2023   2022
 Store                                 29.5%  34.7%
 Online       Total online             70.0%  64.8%
              Group's online platform  23.0%  23.6%
              Aggregator               47.0%  41.2%
 Call centre                           0.5%   0.5%
 Total                                 100%   100%

 

 

Delivery - Take away / Eat in mix

                     2023   2022
 Delivery            72.3%  73.5%
 Take away / Eat in  27.7%  26.5%
 Total               100%   100%

Notes

((1)) COFFY numbers are included in all Turkey and Group figures, unless
presented separately. Like-for-like figures exclude COFFY. These numbers are
not audited.

((2)) IAS 29 'Financial Reporting in Hyperinflationary Economies' is currently
applicable in Turkey. Company's preliminary results for the year ended 31
December 2022 and also for the (unaudited) financial statements for the period
ended 30 June 2023.

((3)) As announced on 21 August 2023, the Group initiated bankruptcy
proceedings for its Russian subsidiary. As the operations have been suspended
accordingly, Russia is not included in the numbers. Please note that there
were 171 Russian stores in the system a year ago.

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

((5)) 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). This is a non-IFRS measure and non-IFRS measures are not
audited.

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

 

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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