21 Jul 2020 07:00
For Immediate Release | 21 July 2020 |
DP Eurasia N.V.
("DP Eurasia" or the "Company", and together with its subsidiaries, the "Group")
Trading Update for the Six Months Ended 30 June 2020
Digital drives resilient performance
| For the period ended 30 June |
| |
| 2020 | 2019 | Change |
| (in millions of TRY, unless otherwise indicated) |
| |
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Number of stores | 754 | 736 | 18 |
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Group system sales (1) |
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Turkey | 438.9 | 386.4 | 13.6% |
Russia | 212.7 | 249.0 | -14.6% |
Azerbaijan & Georgia | 13.1 | 10.0 | 30.4% |
Total | 664.7 | 645.4 | 3.0% |
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Group system sales like-for-like growth(2) |
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Group(5) | 6.0% | 7.3% |
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Turkey | 13.5% | 7.7% |
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Russia (based on RUB) | -20.1% | 4.7% |
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Group system sales(1) like-for-like growth(2) | Post-Covid (16 Mar-30 Jun) |
Turkey | 5.8% |
Russia (based on RUB) | -29.7% |
| Pre-Covid | y-o-y growth | Post-Covid | y-o-y growth |
| (1 Jan-15 Mar) | (16 Mar-30 Jun) | ||
Group system sales(1) | (in millions of TRY, unless otherwise indicated) | |||
Turkey | 200.6 | 26.2% | 238.4 | 4.7% |
Russia | 113.1 | 9.6% | 99.9 | -31.0% |
Azerbaijan & Georgia | 5.6 | 43.3% | 7.4 | 21.3% |
Total | 319.3 | 20.0% | 345.7 | -8.7% |
Highlights
· Strong pre-Covid (1 Jan-15 Mar) group system sales growth of 20.0% driven by Turkey
o Turkish system sales growth of 26.2%
o Russian system sales growth of 9.6% (-6.3% based on RUB)
· Post-Covid (16 Mar-30 Jun) group system sales performance resulted in an 8.7% contraction
o Turkish system sales growth of 4.7%
o Russian system sales contraction of -31.0% (-33.2% based on RUB)
· Group online system sales(4) growth of 27.7%
o Turkish online system sales growth of 38.2%
o Russian online system sales growth of 14.2% (5.3% based on RUB)
· Online delivery system sales(3) as a share of delivery system sales surpassed 75% (H1 2019: 67.5%)
· Strong liquidity position - TRY 259 million of cash at hand and additional available bank lines of TRY 82 million as at 30 June 2020
· 11 net store closures in H1 2020 due to Covid
Commenting on the update, Chief Executive Officer, Aslan Saranga said:
"Group performance has been resilient during the last quarter. Our business, along with the sector, was heavily affected by the on-set of the Covid-19 pandemic from the middle of March. We took immediate anti-infection measures for business continuity, such as contactless delivery, contactless take-away and compulsory mask utilisation to ensure the well-being of our customers and employees. However, governmental measures implemented in our core markets resulted in varying operational constraints. In Istanbul, 26 days of curfew, mostly on weekends and public holidays, was instigated, whereas in Moscow the curfew lasted 72 days straight until 9 June 2020. Turkey also started the normalisation process earlier compared to Russia, such as the opening of restaurants for dining in as of 1 June 2020. As a result of these different approaches by local governments, Turkey is moving closer to its pre-Covid level of operations; however, Russia has some ground to make up especially in dine-in, which opened on 23 June 2020, and take-away. The start of the normalisation resulted in better sales performance in June compared to May in both Turkey and Russia.
"As Covid continues to have a deeper effect in Russia, its effect on our Russian business and its results is also more severe. In line with the Russia plan, we have also taken action to right size the cost base and minimize capital expenditures; however, the impact of Covid is making it difficult to gauge the full benefits of the plan especially on the top line.
"Despite these challenging circumstances, digital continues to be a core focus and to drive our business forward. Online ordering as a percentage of delivery surpassed 75% in the period, up from 67.5% in H1 2019 as we continuously fine tune our user experience, network architecture and loyalty programme.
"Through our experience during the first wave of the pandemic, we feel more comfortable that a full shut down of our stores in the future would be a very remote possibility. Assuming that we are not faced with significantly worse operational constraints, the Group remains confident in its near-term plans for business continuity and cash flow as well as its overall prospects in the longer term."
Enquiries
DP Eurasia N.V. |
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Selim Kender, Chief Strategy Officer & Head of Investor Relations | +90 212 280 9636 |
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Buchanan (Financial Communications) |
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Richard Oldworth / Victoria Hayns / Tilly Abraham | +44 20 7466 5000 dp@buchanan.uk.com |
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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: 03333000804 Participant PIN code: 52942107# URL for international dial in numbers: https://events-ftp.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 754 stores (542 in Turkey, 199 in Russia, nine in Azerbaijan and four in Georgia as at 30 June 2020), and operates through its owned corporate stores (32%) and franchised stores (68%). 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 30 June |
| ||||||
| 2020 |
| 2019 |
| ||||
| Corporate | Franchised | Total |
| Corporate | Franchised | Total | |
Turkey | 121 | 421 | 542 |
| 136 | 402 | 538 | |
Russia | 120 | 79 | 199 |
| 101 | 86 | 187 | |
Azerbaijan | - | 9 | 9 |
| - | 7 | 7 | |
Georgia | - | 4 | 4 |
| - | 4 | 4 | |
Total | 241 | 513 | 754 |
| 237 | 499 | 736 | |
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 periods ended 30 June 2020 and 2019:
|
| For the period ended 30 June | |||||
|
| 2020 | 2019 | ||||
|
| Turkey | Russia | Total | Turkey | Russia | Total |
Store |
| 28.3% | 10.9% | 23.5% | 34.0% | 20.8% | 30.0% |
Online | Group's online platform | 25.1% | 73.9% | 41.5% | 30.1% | 79.2% | 48.0% |
Aggregator | 44.4% | 15.2% | 33.6% | 31.9% | - | 19.5% | |
Total online | 69.5% | 89.1% | 75.1% | 62.0% | 79.2% | 67.5% | |
Call centre |
| 2.3% | - | 1.4% | 4.0% | - | 2.5% |
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 periods ended 30 June 2020 and 2019:
| For the period ended 30 June | |
| 2020 | 2019 |
Group online system sales like-for-like growth(2) |
|
|
Group(5) | 32.3% | 22.9% |
Turkey | 38.6% | 24.1% |
Russia (based on RUB) | 8.9% | 16.9% |
Liquidity
The Group continues to have a strong liquidity position, having access to cash at hand and additional borrowing capacity available from its Turkish banks. As at 30 June 2020, the Group had TRY 259 million of cash at hand and additional available bank lines of TRY 82 million.
The Group's strong liquidity position enables it to prepay its bank borrowings in Russia if required, and still maintain a strong liquidity position. The Group obtained a waiver from Sberbank with respect to its covenants on 30 June 2020 due to Covid and will either obtain a waiver for the rest of the year or repay the remaining loan. The principal outstanding under the Sberbank loan currently amounts to RUB 1.6 billion, of which RUB 0.3 billion is supported by a cash collateral deposit.
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) Group like-for-like growth is a weighted average of the country like-for-like growths based on store numbers as described in Note (2).
Appendices
Exchange Rates
| For the period ended 30 June | ||||
| 2020 |
| 2019 | ||
Currency | Period End | Period Average |
| Period End | Period Average |
EUR/TRY | 7.708 | 7.132 |
| 6.557 | 6.343 |
RUB/TRY | 0.097 | 0.093 |
| 0.091 | 0.086 |
EUR/RUB | 78.678 | 77.961 |
| 71.820 | 73.840 |
Delivery - Take away / Eat in mix
| For the period ended 30 June | |||||
| 2020 | 2019 | ||||
| Turkey | Russia | Total | Turkey | Russia | Total |
Delivery | 70.0% | 77.4% | 72.4% | 63.9% | 60.3% | 62.5% |
Take away / Eat in | 30.0% | 22.6% | 27.6% | 36.1% | 39.7% | 37.5% |
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.