The Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price is up around 8% after reporting its FY20 result to investors.
Domino’s FY20 result
The Domino’s result impressed considering the difficult COVID-19 conditions.
Network sales grew by 12.8% to $3.27 billion with online sales increasing by 21.4% to $2.36 billion. Across the group, same store sales rose by 5.8%.
Total Japanese sales rose by 25.9% to ¥59.2 billion and Japanese EBITDA (click here to learn what EBITDA means) grew by 29.9% to ¥7.5 billion.
European network sales increased 5.1% to €749.1 million with Germany delivering leading sales growth. European EBITDA fell 1.5% to €50.6 million after closures in France and support for franchisees.
Australian and New Zealand sales grew 4.1% to $1.2 billion, though ANZ EBITDA fell 5.8% to $129.4 million.
Domino’s reported that EBIT (click here to learn what EBIT means) rose 3.6% to $228.7 million. Net profit after tax increased by 3.3% to $145.8 million. Earnings per share (EPS) rose by 2.7% to 169.4 cents.
The company spent $14.1 million supporting stores to help keep people safe.
Perhaps the most impressive statistic was that free cash flow jumped 90.7% to $161.9 million.
Domino’s dividend
The Domino’s board decided to increase the full year dividend by 3.3.% to 119.3 cents.
Management comments and outlook
The company said that while the speed of change from COVID-19 was unforeseen, Domino’s long-term strategy anticipated a global shift to food ordered online and delivered. The company believes the decade-long investment was essential to meeting the current challenges.
Domino’s CEO and Managing Director Don Meij said: “In ordinary times I would be delighted with double digit same store sales growth and network sales approaching 20%. But these are not ordinary times.
“We are going to do everything we can, with the experienced teams we have, to add new customers and increase frequency. But the effect of societal restrictions is not entirely within our control.
“What is in our control is how we respond to our environment, and customer expectations. The performance of our people during COVID-19 underpins our confidence in the long-term future of our business – 5,500 stores by 2033.”
Over the next three to five years the company is aiming for same store sales growth of 3% to 6% and network growth of 7% to 9%.
Domino’s has done very well for shareholders since the COVID-19 crash. The Domino’s share price is up 85% since 19 March 2020. Domino’s is growing well, but it’s now priced highly, so I think it may be getting a bit ahead of itself considering it’s guiding for medium-term moderate growth. There are other ASX growth shares that I think look better value such as Pushpay Holdings Ltd
(ASX: PPH).
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