WOOD Flash – DP Eurasia: 1H19 results in line with estimates, good Turkey, weak Russia
DP Eurasia has reported group revenue up 21.6% and system sales up 26.4%, driven by both lfl and store openings (system sales were reported earlier). Turkish systems sales grew by 9.9% and Russian system sales increased by 63.0% (30.1% based on RUB). The adjusted EBITDA (ex.IFRS 16) was up 15.1%, to TRY 46.4m (vs. TRY 40.3m in 1H18); the adjusted net loss (ex.IFRS 16) arrived at TRY 7.4m, a slight improvement yoy.Overall, the 1H19 results are broadly in line with our estimates, but the mix is slightly concerning, in our view, and might have some negative trading impact. We like the Turkey performance, which was good, taking into account the environment in 1H19. However, we are a little concerned about the performance in Russia, where the company reported a decline in the EBITDA margin yoy and plans to repurchase some stores from franchisees, and the competition is increasing. Also, we note the increase in net debt, which is the effect of FX and currency translation from RUB to TRY, as well as capex, according to the company.
DP Eurasia is the exclusive master frachisee in Turkey, Russia, Azerbaijan and Georgia of the Domino's Pizza brand. Co. offers pizza delivery and takeaway/eat-in facilities through its 212 corporate stores and 359 franchised stores as of Mar 31 2017. Co. offers pizza products at a range of price points and adapted to local tastes. It also offers complementary products such as chicken, other side dishes and desserts, some of which have been developed by Co.s innovation center in Istanbul and subsequently adopted by other master franchisees of DP Inc. around the world. Co. owns and operates five commissaries which manufacture the pizza dough and supply system stores in Turkey and Russia.
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