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DP Eurasia NV on Wednesday reported a lower profit, despite higher revenue in 2022, as the increase in the cost of sales outpaced revenue growth.
The master franchisee for Domino’s Pizza in Russia, Turkey, Azerbaijan and Georgia said pretax profit in 2022 fell 11% to ₺191 million, about £8.0 million, from ₺215 million in 2021.
Revenue grew 7.6% to ₺2.22 billion from ₺2.06 billion. Cost of sales, however, increased 10% to ₺1.40 billion from ₺1.27 billion, while general administrative expenses were 7.2% higher at ₺282 million compared to ₺263 million.
Further, financial expenses rose 81% to ₺240 million from ₺133 million.
The company counted 859 stores at the end of 2022, up 5.1% from 817 in 2021. Excluding Russia, where it seeks to limit investment following the country’s invasion of Ukraine in 2022, store figures grew 11% to 700 from 629.
Looking ahead, DP Eurasia said it anticipated ‘strong’ store openings momentum in Turkey to continue. In the first 11 weeks of 2023, sales for continuing operations rose 18% versus a year prior, with like-for-like sales in Turkey up 12% during that period.
Further, it expects to ‘appropriately manage’ the inflationary risk and to open 35 to 40 Domino’s Pizza net store openings in Turkey during 2023, as well as 50 to 60 net store openings of its coffee chain COFFY in the country.
For 2023, DP Eurasia expects a capital expenditure of ₺160 million, up sharply from ₺82 million in 2022.
The company said it continues to evaluate its Russian presence, considering a divestment of its operations in the country, but notes there can be no certainty as to the outcome.
‘In the meantime, the group continues to limit investment in Russia and remains focused on optimising the existing store coverage,’ it said.
However, it noted the macro-economic backdrop and inflation risk may affect overall growth levels.
DP Eurasia shares were 8.3% higher at 43.20 pence each in London on Wednesday afternoon.
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