“We expect margin pressures,particularly in Europe,to drag on Domino’s earnings in the near to medium term. Further,as we continue to see rising interest rates and inflation,consumer spending is likely to slow,which in turn poses a risk to Domino’s sales.”
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The $20.2 billion pizza giant has the exclusive master franchise rights for the brand not just in Australia,but in New Zealand,Belgium,France,The Netherlands,Japan,Germany,Luxembourg,Denmark and Taiwan. It recently added Malaysia and Singapore to that list,with Cambodia expected to become part of the portfolio in the first quarter of 2023.
Expansion in these Asian markets has bulked out Domino’s debt to $635 million.
The trading halt will be lifted and the $150 million share sale to professional investors such as investment funds will be completed on Friday.
The company on Thursday reaffirmed its trading forecast,provided at its early November AGM,where it outlined “materially lower” earnings for the first half of 2023 compared to the previous corresponding period. Net profits for fiscal 2023 would be weighed down by $35 million due to a number of headwinds,including inflation and foreign exchange.
Domino’s Pizza Enterprises’ fiscal 2022 underlying net profits fell 12.5 per cent to $165 million,weighed down by lockdowns in France and Japan.
Meij said that he expected inflation pressures to simmer down,but thebusiness would continue to raise prices anyway to boost margins. In July,Domino’s introduced a 6 per cent delivery fee for Australian customers amid rising food and fuel costs.
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