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DP Poland still on expansion path as pizza demand remains firm

Snapshot

  • Operates the Domino’s Pizza master franchise in the country
  • Poland one of the last large high-growth takeaway markets
  • Deal with Poland's largest takeaway delivery group, Pyszne
DP Poland PLC -

Quick facts: DP Poland PLC

Price: 4.01 GBX

AIM:DPP
Market: AIM
Market Cap: £10.17 m
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What it does

DP Poland PLC (LON:DPP) operates the Domino’s Pizza master franchise in the country.

Poland is one of the last large high-growth takeaway markets left in Europe.

 

How is it doing

System sales rose in the first half of 2019 and DPP is looking to continue expanding its sub-franchise estate in the second half.

For the six months ended 30 June, the group reported sales of £8.3mln, 10% higher than the prior year, with the number of orders originating online rising to 80% from 77%.

Like-for-like sales growth dipped slightly by 1% in the period, while pre-tax losses were flat at around £1.8mln.

The figures were bang in line with a trading update issued in July, which had highlighted that despite “strong comparatives” denting LFL sales in January and February, growth had recovered in later months with LFLs in July and August rising 1% and 8% respectively.

Looking ahead, the company said it is in discussions with existing and potential sub-franchisees to open new stores and expected the number to rise in the second half alongside planned growth across its entire store estate, which grew 10% in the first half to 69 locations.

The firm added that the rise of delivery aggregators in Poland such as UberEats, Pizza Portal and Pyzszne would be “particularly helpful” in regions where the Domino’s brand was less well known.

Nick Donaldson, DP’s non-executive chairman, said that despite “recent headwinds” in the sector, including food and labour costs, the group was “confident” that it would continue to grow in the market.

 

 

What the broker says: Peel Hunt

“We believe that the business is still on track for a positive EBITDA result in 2022,” Peel Hunt said in September.

“With continued store growth, and a key new management hire we believe the business is still on track for EBITDA and cash flow breakeven in FY22E and we reiterate our Buy rating and 15p target price.”

 

Inflexion points

  • Iwona Olbrys appointed as general manager in Poland
  • Polish economy remains strong
  • Discussions with sub-franchisees ongoing over new stores to expand estate in the second half of 2019

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Watch

World Cup adds spice to bumper first half for DP Poland

DP Poland Plc's  (LON:DPP) Peter Shaw tells Proactive Investors system sales grew 38% in the first half of 2018 as a result of double digit like-for-like sales growth and sales from non-like-for-like stores. He adds that the proportion of sales ordered online has continued to grow...

on 19/7/18

2 min read