The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is in focus after the company announced its FY25 half-year result.
Domino’s Pizza Enterprises is the master franchisor for Domino’s outlets for a number of countries including Australia and New Zealand, Japan, Taiwan, Malaysia, Germany and France.
HY25 result
Here are some of the main highlights from the first six months of FY25 compared to HY24
- Network sales fell 2.9% to $2.08 billion
- Network store count declined 2.6% to 3,736
- Underlying EBITDA declined 3.9% to $178.1 million
- Underlying EBIT fell 6.7% to $100.6 million
- Underlying net profit after tax (NPAT) dropped 5.7% to $58.8 million
- Reported net profit sank 138% to a loss of $22.2 million
- Free cash flow down 52.9% to $30 million
- Dividend per share flat at $0.555
Domino’s said a strong earnings performance in Australia saw EBIT rise 7.6% to $67.7 million, but this was more than offset by a decline in Asian EBIT by 19% to $17 million and a drop of European EBIT by 11.1% to $32.3 million. France and Japan are both in close focus by the company to address underperformance.
But, there was an improvement in Germany and other Asian countries (other than Japan). That could be a promising sign for the Domino’s share price. Foreign currency exchange rates were also a negative for the business.
ANZ same store sales (SSS) growth was 0.6%, after strong growth last year. Asian SSS declined 4.2% because of trading in Japan, though Taiwan and Malaysia “exited H1” with SSS growth of more than 10%. Europe SSS growth was 0.6%, despite the weakness in France.
The company has taken action to deliver immediate savings, including the recent announcement to close 205 loss-making stores.
But, on the positive side of things, Domino’s said the profitability of its franchisees improved 13.7% to $96,400 of EBITDA over 2024. This is important for the overall health of the whole company.
Outlook for the Domino’s share price
The company is trying to reduce its costs and grow same store sales. It has already achieved an annualised saving of more than $34 million across the network.
Possibilities of growing same store sales have been identified through initiatives focused on “quality food, value and customer experience, such as more transparent and consistent pricing, which can be a barrier for new customers.”
It noted in Germany it has the market leadership position, with three times share its nearest competitor, but it only covers just one third of the geography.
Domino’s said it’s committed to returning to profitable growth and delivering improved franchise partner and shareholder returns.
I think the ASX share is doing the right things to try to turn things around, but it could take time for this to play out. It’s difficult to say at this stage how sustainably profitable Domino’s can be. It could be a recovery opportunity from here, but I wouldn’t bet my house on it.
