DP Poland narrows losses as it expands Domino's footprint

DP Poland reported a 16% improvement in pre-IFRS revenue in its final results on Friday, to PLN 69m (£13.67m).

The AIM-traded firm, which holds the master franchise for the US-based Domino’s Pizza brand in Poland, said system sales were ahead 13% for the year ended 31 December at PLN 81m, which included the six highest monthly levels of system sales for the group to date.

Like-for-like growth in system sales was reported as 3% year-on-year, although the first half of 2019 was down 1% on the first half of 2018, which the board said reflected the “strong comparatives” driven by television advertising in the first two months of 2018.

For the second half, like-for-like growth in system sales was 6%.

Pre-IFRS group EBITDA losses improved by 5% to £1.8m for 2019, while the group’s pre-IFRS group loss for the period improved by 10% to £3.4m.

Group performance was said to have been in line with management expectations for the year, with cash at bank at period end standing at £3.6m, up from £2.0m at the end of 2018.

On the operational front, DP Poland said 82% of delivery sales were ordered online during the year, up from 77% in 2018, while store numbers increased to 69 stores from 63, satisfying the Domino's Pizza master franchise agreement requirement.

A total of six new corporate stores were opened, while three corporate stores were acquired by two new sub-franchisees and two corporate stores were taken under management contract.

DP Poland also reported “positive interaction” with fast food sales platform Pyszne.pl, which is the local brand of Just Eat Takeaway.com.

“2019 delivered continued expansion and growth in system sales during the year, notwithstanding the strong comparatives driven by our television advertising in January and February 2018,” said chief executive officer Iwona Olbryś.

“Tce Coronavirus crisis presents our industry - and business in general in Poland and around the world - with some major obstacles.

“Nevertheless, I believe that the Domino's brand, and its reputation for quality of product and service, put us in a good position.”

Olbryś said that, while dine-in restaurants in Poland were permitted to reopen this week, the company was continuing to deliver pizzas typically within 25 minutes from order.

“Our focus on delivery and collection, and online ordering, positions DP Poland well in the current environment.

“However, with so much uncertainty prevailing, at the present time we can give no guidance on the outlook for DP Poland in the current financial year.

“Our customers order their pizzas increasingly on our digital platforms, and pay for their orders on that platform too.”

In Poland, Olbryś said the company believed it was “best in class” on that front.

“In light of the coronavirus concerns, we now offer contact free delivery and contact free carry-out.

“We continue to create new initiatives and seek to adapt to the 'new world'.”

One consequence of the crisis, Iwona Olbryś pointed out, had been to bring about some reduction in the firm’s food and labour costs.

“Whilst the macro outlook remains uncertain, in this new world I believe that DP Poland holds an important position in the Polish food and beverage industry and good prospects.”

At 1030 BST, shares in DP Poland were flat at 8.5p.