NZ business making plenty of dough for Domino's Pizza

By NZPA

Monday 19th February 2007

The New Zealand market continues to be a strong performer for Australian company Domino's Pizza, and it sees room to expand in Auckland and throughout the regions.

Domino's Pizza said New Zealand revenue rose 62% for the first half ended December to $7.3 million, compared with 36% total revenue growth largely due to the company's European acquisition.

"New Zealand continues to grow for us, we're adding new stores, we're getting real same-store sales growth, and consumers are still warming to the Domino's brand as it grows throughout New Zealand," said chief executive Don Meij.

Earnings before interest, tax, depreciation and amortisation (ebitda) rose 200% in New Zealand to $1.2m, in contrast to a 21% decline in total ebitda to $9.6m.

A 46.2% decline in overall net profit to $A3.5m ($NZ3.97m) was put down to the cost of a European expansion and poor first quarter sales in Australia, which had already been signalled to the market.

Domino's entered the New Zealand market in July 2003, and planned to open another 23 stores over the next three to five years, bringing total New Zealand stores to at least 85.

"We're looking at where people can't access Domino's very well. So even in a place like Auckland today we're not penetrated well enough -- whilst we're on television throughout New Zealand, people can't really access a Domino's store easily."

Meij was happy with the coverage in Wellington and Christchurch, and was not interested in acquiring any competitors to fuel growth.
"We see pretty well from here it's all organic growth in New Zealand and we're quite positive," he said.

"It's a really dynamic market, the whole pizza volume has gone up quite significantly in the last three years," Meij said, crediting Domino's entry at the "value" end, and Hell Pizza at the top end of the market.

"The unfortunate side is that Pizza Hut is getting squashed in the middle, but at the same time Pizza Hut's a successful business and still the biggest (pizza) business in New Zealand."

During the half year, Domino's added 181 stores globally bringing the total number of stores in the network to 619. It has plans over the next five years to open a further 150 stores in Australia, where growth has slowed but is expected to pick up.

The company is forecasting a 40% rise in net profit after tax for the second half compared with the first half.

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