Companies: DOM   

UK market leader Domino's Pizza delivered yet another set of results ahead of market expectations in the year to December, increasing pre-tax profits by 31 per cent to £2.9 million. And like-for-like sales are booming ahead again this year, Ben Cobley reports.

Domino's (DOM) earnings per share were up a dazzling 53 per cent to 3.9p (fully diluted) compared to 2000, on group turnover that was increased 35 per cent to £43.8 million.

Much of the increase was attributed to a nationwide TV advertising campaign, which is funded on a continuing basis from a 4 per cent sales levy paid into a dedicated fund by each Domino's franchise operation. The management points out that, though only 40 per cent of the UK TV audience have homes in a Domino's delivery area, new stores are feeling the positive effects, with average sales up 12 per cent compared to new openings made previously.

A buoyant management team today reiterated its short-term ambition to increase the number of Domino's to 500 by 2006. The number currently stands at 241, after four new openings since the year end. Only four of those are not profitable at the moment.

As for the future, a new plant is going to open in Penrith in the summer, allowing further expansion into Scotland and the North of England and creating the infrastructure to be able to service the targeted 500 UK stores with little extra investment.

House broker Peel Hunt analyst Paul Hickman has raised his forecast yet again, and now expects £3.3 million pre-tax for the year, delivering 3.9p of earnings, rising to 5.4p on £4 million profits in 2003.

At 73p, down 4.5p on the day, the company has a market capitalisation of £36.8 million and trades at 18.7 times prospective earnings for the year.