DP Eurasia N.V. 2018 Trading Update - Group Breakfast/Lunch
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DP Eurasia N.V. 2018 Trading Update – Group Breakfast/Lunch
Disclaimer
This Presentation is not an offer to buy or sell any securities. Save where otherwise indicated, the Company is the source of the
content of this Presentation and, accordingly, although care has been taken to ensure that the facts stated in this Presentation are
accurate and that the opinions expressed are fair and reasonable, no representation, warranty or undertaking, express or implied, is
made by any of the Company, any of its directors, officers, employees, affiliates, advisors, shareholders or representatives as to,
and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions
contained herein. Neither the Company nor any of its directors, officers, employees, affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents
or otherwise arising in connection with the Presentation.
Certain statements in this Presentation are not historical facts and are “forward looking” statements. These forward-looking
statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”,
“expects”, “intends”, “plans”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology.
None of the Company, its directors, officers, employees, affiliates, advisors, shareholders or representatives intend or have any duty
or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this Presentation or to
update or to keep current any other information contained in this Presentation. The information and opinions contained in this
Presentation are provided as at the date of this Presentation and are subject to change without notice. As a result, you are
cautioned not to place undue reliance on such forward looking statements.
2
Presentation Team
Aslan Saranga
Chief Executive Officer
Selim Kender
Chief Strategy Officer and Head of Investor Relations
3
SECTION 1 Overview
DP Eurasia is a member of successful global network
• With 643 stores across its network, DP Eurasia is the 5th largest master franchisee within the global Domino’s system and is consistently one of the best performing master
franchisees globally
• Domino’s is one of the most successful fast food brands and the global leader of home delivery with US$10.9 Bn sales in 2016 and 14,434 stores in 85 countries with
95 consecutive quarterly positive LfL internationally(1)
• The listed international Domino’s master franchisees (excluding DP Eurasia) have created 177%(2) shareholder value in the US$ terms in the last five years
The largest Domino's master franchisees worldwide Global presence of Domino's 5 largest master franchisees
Domino’s Pizza Domino’s Pizza Jubilant
Alsea DP Eurasia
Enterprises Group(10) FoodWorks(11)
Australia
Mexico UK
Belgium
Colombia Ireland Turkey
France
Spain Switzerland India Russia
Countries Netherlands
Argentina Norway Sri Lanka Azerbaijan
Germany
Chile Sweden Georgia
New Zealand
Brazil Iceland
Japan
Population
332 MM 496 MM 95 MM 1,360 MM 238 MM
Served(3)
Domino’s Pizza
Major Starbucks
Domino’s Pizza
Portfolio Domino’s Pizza Burger King Domino’s Pizza Domino’s Pizza
Dunkin’ Donuts
Brands Vips
Other(4)
Domino’s
2,135 980 1,149 1,128 643
Store #(5)
Other
- 2,373 - 43 -
Store #(5)
Market
$3,199 MM $2,858 MM $2,377 MM $2,161 MM $452 MM
Cap(6)
L5Y Share
Price 33% 17% 15% 11% n/a
CAGR(7) Domino’s Pizza Enterprises Alsea Domino’s Pizza Group(10)
System
Sales(8),(9)
$1,748 MM $2,022 MM $1,364 MM $382 MM $215 MM Jubilant FoodWorks(11) DP Eurasia
5. As of July 2017 for Domino’s Pizza Enterprises, January 2018 for Jubilant FoodWorks, October 2017 for
EBITDA(9) $174 MM $277 MM $127 MM $37 MM $25 MM Domino’s Pizza Group, October 2017 for Alsea, December 2017 for DP Eurasia
6. Ordered by market cap as of 19 January 2018
7. As of 19 January 2018, in local currencies
Source: Company Information for DP Eurasia, Annual Reports for Other Companies, CapIQ, EIU via S&P Global 8. Group system sales as of latest financial year reported by the company. Total income figure used for Jubilant
Notes: Market Intelligence FoodWorks, 2016 figure for DP Eurasia
1. Store count, countries of operation and consecutive quarterly LfL figure as of October 2017 9. Converted at average FX rates of each companies’ latest reported financial year respectively– USDTRY of
2. Average total shareholder return for listed franchisees excl. DP Eurasia for the period between 19 January 2013 3.65, USDINR of 67.06, USDAUD of 1.33, GBPUSD of 1.36, USDMXN of 18.64. Adjusted EBITDA figure for
and 19 January 2018 DP Eurasia
3. Population figures are 2017 actual; Source: United Nations World Population Prospects 10. Domino’s Pizza Group also has investments in Domino’s Iceland, Domino’s Sweden and Domino’s Norway
4. Includes Chili’s, California Pizza Kitchen, P.F.CHANG’S, Pei Wei, Italianni’s, The Cheesecake Factory, El (which will be consolidated once acquisitions of controlling interests is completed)
PorTon, Foster’s Holywood, Canas y Tapas, Archie’s, Lavaca 11. Jubilant FoodWorks also has the exclusive rights to operate Domino’s Pizza brand in Bangladesh and Nepal 5
DP Eurasia overview
Growing regional expansion from an established strong base
in Turkey(1)… …combined with strong growth in System Sales…
Moscow
TRY MM
22 99
Russia 860
647
543
470
Georgia
3
Turkey 5
372 142 x4 Azerbaijan
2014 2015 2016 2017
Source: Management Accounts
Franchise stores Corporate stores Commissaries
DP Turkey DP Russia
…resulted in accelerating Adjusted EBITDA(3) performance
TRY MM
Market Position 2017 5% 6% 12%
#1 #1 #1 #3
(by number of stores)
Number of Stores 2017 514 5 3 121 75
Corporate 142 - - 99
Franchise 372 5 3 22 34
25
Number of Commissaries 2017 4 - - 1
System Sales CAGR ’14–’17 13% 118%
2014 2015 2016
Average LfL(2) ’14–’17 7% 37%
Adj. EBITDA Margin (Adj. EBITDA/System Sales)
Source: Company Information, Management Accounts Source: IFRS Combined and Consolidated Financial Information, Management Accounts
Notes:
1. Number of stores as of 2017
2. LfL calculation includes stores which are operational for more than 52 weeks and aren’t considered as split stores for the underlying period. Arithmetic average of non-split LfL for 3 years (’13–’14, ‘14 –’15 and ’15 –’16); excluding
Azerbaijan and Georgia due to no LfL stores in the period
3. Adjusted for activities that are not part of the normal course of business and are non-recurring including share-based incentives, IPO costs and severance costs for Turkey and Russia 6
FY 17 Trading Update Highlights
System Sales(1) LFL Growth Store Count(1)
TRY 654.4 MM 10.0% 522
14.6% 27
TRY 205.4 MM 28.9% 121
169.0% 49
Notes:
1. Including Azerbaijan and Georgia 7
SECTION 2 Operational Review
Attractive investment opportunity with high growth
potential and proven business model
1 Leading market positions
2 Highly attractive, underpenetrated markets with substantial growth potential in the Group’s addressable segments
3 Strong online capabilities underpin DP Eurasia’s growth
4 Globally proven business model successfully applied and adapted to DP Eurasia’s local markets
5 Simple and scalable, asset-light business model
6 Highly attractive customer proposition and strong brand equity
7 Track record of resilient and profitable growth as well as strong cash conversion
8 Founder-led, experienced management team
9
1 Leading Market Positions
DP Eurasia has become a strong challenger to the top
Leading the pizza market, Domino’s… 2 players…
Chained pizza in Turkey, number of stores(1) Chained pizza in Russia, number of stores(2)
9.7x
514 262
4.3x larger than
#2 player
2.1x 6.4x 2.3x 140
123 132 121
108
120 54
92 85 62
44 43 33 27 23 24
23 19
‘14 ’17 ‘14 ’17 ‘14 ’17 ‘14 ’17 ‘14 ’17 ‘14 ’17
Source: DP Turkey Company Information on Competitors Source: DP Russia Company Information on Competitors
…is #2 player in the fast food market… …and is the largest pizza player in Greater Moscow(3)…
Number of stores(1) Number of stores(2)
603
514 116
70
262 61
192 39
151 137
92
50
Delivery focused players
Source: DP Turkey Company Information on Competitors Source: DP Russia Company Information on Competitors
Notes:
1. All Turkish data s of Oct-17 except for Domino’s (Dec-17)
2. All Russia data as of Dec-17
3. Includes Moscow and Moscow regions 10…With substantial growth potential in the Group’s
2 addressable segments (cont’d)
Turkey: runway to double footprint… Building blocks of growth
# of Domino’s stores
Increased coverage
>1.7x Entry into new regions
within served regions
c. 400
c. 900
Organic growth in
Split of current stores
514 footprint
Improvement in store
2017 Whitespace(1) Total Potential for DP Turkey (2) Higher OHD penetration
economics
Source: Company estimates
…and strengthen the castles
Number of stores, 2017 Number of Provinces
Present in
68 of 81provinces 38
Istanbul
114 68
Ankara 16
6 19 13
17 21 Bursa 23 29 9
5
Izmir
0–50 K households per store 150 K+ households per store
Franchisees
Company owned stores 50k–100 K households per store Unpenetrated Provinces
Commissaries 100k–150 K households per store
Source: Company estimates
Notes:
1. Whitespace represents the difference between Company’s store number potential in the long term and current store count
2. Excluding Azerbaijan and Georgia 11…With substantial growth potential in the Group’s
2 addressable segments (cont’d)
Russia: representing vast potential Building blocks of growth
# of Domino’s stores
>12.3x
Moscow
c. 1,400 c. 1,500
Higher OHD penetration
121
2017 Whitespace(1) Total Potential for DP Russia Prioritised regions Second priority regions
Source: Company estimates
Huge potential to expand the platform
European part of Russia Region Population (MM)
Moscow and Moscow Oblast 19.8
Saint Petersburg and Leningrad Oblast 7.1
Krasnodar Krai 5.6
Saint Petersburg
Sverdlovsk Oblast (center -Yekaterinburg) 4.3
Moscow Rostov Oblast 4.2
Nizhniy Novgorod Bashkortostan Republic (center - Ufa) 4.1
Voronezh Kazan Perm Tatarstan Republic (center - Kazan) 3.9
Yekaterinburg Nizhniy Novgorod Oblast 3.2
Rostov-on-Don Samara
Volgograd Samara Oblast 3.2
Krasnodar Ufa Perm Krai 2.6
Volgograd Oblast 2.5
Voronezh Oblast 2.3
Source: gks.ru as of 1 January 2017
Notes:
1. Whitespace represents the difference between Company’s store number potential in the long term and current store count 123 Strong online capabilities underpin DP Eurasia’s growth
Online channel supports Lfl growth...
System sales LfL growth, %
Turkey Russia
38%
19% 141%
10% 79%
7% 42% 29%
Online Total Online Total
2016 2017 2016 2017
…and has further room to improve
Online delivery system sales as a % of delivery system sales
78% 81%
71%
67%
53%
48%
34%
28% 41%
34%
2014 2015 2016 2017
Domino's Pizza UK DP Turkey DP Russia
Source: Company Information for DP Turkey and DP Russia, Company Filings for Domino’s Pizza UK
13Globally proven business model successfully applied
4 and adapted to DP Eurasia’s local markets
Globally Proven Standards…
1 2 3 4 5
Strong Operating Best In Class Simple Store Speed of Exceptional
Setup (Corporate / Online Operations Delivery Culture
Franchise / Infrastructure
Commissary)
DP Eurasia maximizes DP Eurasia utilizes its DP Eurasia adapted an DP Eurasia is the DP Eurasia attracts the
efficiency with a well- online infrastructure to in-house store design leader in delivery by: best talent by:
executed structure support its marketing which:
whereby: and advertising
Embracing the Encouraging former or
strategy which:
Enables fast 30-minute delivery existing employees to
Well-thought out castle preparation and guarantee in both take on franchises,
strategy establishes Maximizes demand delivery of pizza Turkey and Russia enabling a strong
leadership in key cities through clear customer Is cost efficient and is while ensuring highest entrepreneurial spirit
Scalable and low cost segmentation and anchored by store- quality of the product Growth is fostered with
franchise model constant engagement level economics Supporting all ordering new tools and
provides stable Captures demand by requiring moderate methods and ensuring techniques initiated by
revenue stream with offering convenience capital outlay that all meal occasions management
low capex to its customers, Follows Kaizen are captured
Commissaries cover all available anywhere at principles in order to
existing (and potential any time improve the financial
future) stores return profile of the
new stores
…with Successful Local Adaptation and Execution
Source: Company Information 145 Simple and scalable, asset-light business model
Scalable business model
Centralised Strategy, Marketing and IT Centralised Strategy, Marketing and IT
Sales & Delivery Sales & Delivery
Local Marketing Local Marketing
Customer Data HQ Customer Data
Dough & Other Ingredients Dough & Other Ingredients
Logistics Logistics
Corporate Stores Commissaries Franchise Stores
Industry leading standards
SCALABLE WINNING CULTURE TECHNOLOGY
Lower purchasing costs = competitive prices Best value for money Continuous investment on online capabilities
Centralised supply chain = command pricing Quick and convenient Highest website traffic among fast food players in
Store network and disciplined approach = 30 minute Delicious pizza Turkey in 2017
delivery guarantee Support for employees Android application is the most downloaded app of a
Scale of the network = resources to invest in fast food company in Turkey Google Play Store
Well-designed incentive system
marketing and technology Introduced Facebook Messenger, and intends to
launch WhatsApp and text message “one-click”
ordering capabilities
Source: Company Information
15Highly attractive customer proposition and strong
6 brand equity
Why do consumers choose DP Eurasia?
Attractive pricing vs competitors in Turkey Quick delivery times all year round in Turkey and
I and Russia with high value for money
II Russia, despite the challenging weather conditions
Value for money? Value for money?(1) Delivery on Time Delivery on Time
% of affirmative respondents % of affirmative respondents % %
65 93.0 84.5
50 47
40
33
24 28
20
Domino's Pizza Little Burger Mc Domino's Pizza Pizza Hut Papa John's
Pizza Hut Caesar's King Donald's 2017 2017
Source: Ipsos Connect Brand Health and Ad Source: "Russian OHD market and dining habits" Source: Company Information
Tracking, Feb/Mar 2017 consumer survey in 2016 conducted by Ipsos
III Innovation – New Products
Turkey Russia
Oven baked Sandwich Dev Malzemos Ultra thin crust Mosaic cake
Source: Company Information
Notes:
1. The figures are representing only Moscow 167 Track record of resilient and profitable growth…
Continuous and significant store rollout
# of stores at period end
+76
+58 +58
+68 643
567
+94 509 121
+70 451 72
+59 383 43
+30 19
+27 289 13
+23 160 219
130 466 495 522
103 370 432
80
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
DP Turkey DP Russia
Source: Company Information
…generating strong momentum in system sales… Adjusted EBITDA
TRY MM TRY MM
860 39
31
647
543
470
2014 2015 2016 2017 H1 2016 H1 2017
Source: IFRS Combined and Consolidated Financial Information, Management Accounts
178 Founder-led, experienced management team
Company leadership
DP Eurasia
Aslan Saranga
Group CEO
Neval Korucu Alpagut Selim Kender
Group CFO Group Chief Strategy Officer and Head of Investor Relations
Turkey, Azerbaijan and Georgia Russia
Aslan Saranga Güvenç Dönmez
CEO of DP Eurasia and Executive Director CEO of Russian Operations
• Founding CEO of DP Eurasia – been with the company for 20 years, making it the 5th largest • Joined DP Eurasia in 2015 as DP Russia’s CEO and kick-started the accelerated growth of the
Master Franchisee in Global Domino’s network company
• Member of General Management Council (″GMC″)(1) – the leadership team of global Domino’s • Previously, he was the CMO at Samsung Russia between 2012-2015. Before that, he held
network several senior marketing roles at P&G in Russia and Europe
• Holds an M.A. in Finance from Istanbul University • Holds a BSc in Industrial Engineering from Bogazici University
Experienced management team Experienced management team
Neval Korucu Alpagut, Ayça Mutluer Bayraktar, Gökhan Yoluaçık, Online Mustafa Özgül, CFO of Elena Ivanova, Igor Kiselev, Head of
Group CFO Sales and Marketing Director Channels and Information Russian Operations Marketing Director Information Technology
• 10 years at DP Turkey • 4 years at DP Turkey Technologies Director 3 years at DP Russia 4 years at DP Russia 1 year at DP Russia
• Prev. at Volkswagen • Prev. at Unilever, Pepsico • 3 years at DP Turkey Prev. at Migros, Bechtel Int. Prev. at 4DK Prev. at Zurich Financial
• Prev. at Aksigorta, Ulker Services, Sportmaster
Aziz Babacan, Corporate Kerem Ciritçi, Franchise Muhsin Çevlik, Supply Chain, Maksim Chinenov, Corporate Oleg Yudin, Head of Dmitry Osipov, Real Estate
Operations Director Operations and Business Purchasing and Investments Operations Director Franchise Development Development Director
• 6 years at DP Turkey Development Director Director 1 year at DP Russia 1 year at DP Russia 4 years at DP Russia
• Prev. at Pizza Hut • 10 years at DP Turkey • 6 years at DP Turkey Prev. at KFC Russia Prev. at Traveler’s Coffee, Prev. at Enter-Svyaznoy,
• Prev. at Ritz Carlton, Alarko • Prev. at Danone Arpicom MTS
Awards received Awards received
DP Turkey’s global awards DP Russia’s global awards
Gold Franny
Given yearly to best master franchisees for operational excellence, revenue increase and growth rate 2016 Gold Franny
2008 2009 2010 2011 2012 2013 2014 2015 2016
External Awards
Kristal Elma Golden Drum Felis Effie Reklam Altın Best Data
2013 2014 2014 Etkinliği Yarışması Örümcek Infrastructure
2014 2015 of the Year
2015 Global Viking Award 2014 AWUS(2) Award 2014 The Supervisor of the Year 2015
Notes:
1. Includes top 10 countries in the Domino’s global network
2. Average weekly unit sales 18SECTION 3 Financial Results
Financial snapshot
System Sales Store count
System Sales, TRY MM # of Outlets
14%
646 488 514
566
344 372
70% 72%
144 30% 142 28%
2016 2017 2016 2017
Corporate Franchise
Year on year growth
System Sales Store count
System Sales, TRY MM # of Outlets
169% 205 121
22 18%
72
6%
76
99 82%
68
94%
2016 2017 2016 2017
Year on year growth Corporate Franchise
Source: Company Information
20Like-for-like performance
LfL performance in line with guidance
System sales LfL growth, %
Turkey Russia
38%
19% 141%
10% 79%
7%
42%
29%
Online Total Online Total
2016 2017 2016 2017
Source: Company Information
21Online channel
Share of online ordering growing healthily
Online system sales, %
Turkey Russia
67%
53%
48% 44%
41%
32% 34%
26%
Delivery Total Delivery Total
2016 2017 2016 2017
Group
52%
42%
35%
27%
Delivery Total
2016 2017
Source: Company Information
22Original management guidance
Total potential • 900 • 1,500
store count
Targeted net store • 30 stores** • 2017: 40 stores**
openings per year • We expect franchise stores to be the main driver of • Medium term: 40–60 stores
(medium term) new store openings • We expect franchise and corporate stores to be the
main drivers of new store openings
LfL • High single digit LfL growth • Low to mid-teens LfL growth
(medium term)
• c. TRY20 MM in 2017** • c. RUB500 MM in 2017**
CAPEX program • c. TRY22 MM in 2018** • c. RUB300 MM in 2018**
** short term management guidance was given on 19 September 2017 – some variance in 2017 store numbers/mix and associated capex – full update at prelims
23SECTION 4 Conclusion
Conclusion
• Group system sales growth of 32.8%
o Turkey: 14.2%
o Russia: 169.0%
• LfL growth of 10.0% in Turkey and 28.9% in Russia
• Online share increasing: 51.8% of delivery
• 76 store additions in the period
o Turkey: 27
o Russia: 49
Source: Company Information
25Future growth driven by four core strategy pillars
1 Innovation and online ordering to drive like-for-like growth 2 Large whitespace opportunity in countries of presence
System sales LfL growth, % Domino’s stores, #
Turkey Russia
DP Turkey
c. 900
38%
514
141% (1)
19% 2017 Total Potential
79%
10% c. 1,500
DP Russia
7%
42% 29%
121
Online Total Online Total
2016 2017 2017 Total Potential
Source: Company information Source: Company estimates
3 Leverage scale advantage to further improve profitability 4 Potential to export the platform
Adj. EBITDA / System Sales, % Turkey Adj. EBITDA / System Sales, %
Russia Turkey +0.6 p.p.
12.6% 10.5% 11.1%
4.1%
2016 2016 H1 2016 H1 2017
Adj. EBITDA / System Sales
Adj. EBITDA / System Sales DP Eurasia
Source: Company information
Notes:
1. Excluding Azerbaijan and Georgia 26APPENDIX
DP Eurasia: Financial summary
Key KPIs
1H 2017 1H 2016 Change
Corporate Store Count 223 188 35 • Sales generated by the Group’s system stores (both
System sales
Franchise Store Count 370 326 44 corporate and franchise)
System sales (TRY MM) 398.5 308.8 29.0%
DP Eurasia income statement
(TRY MM) 1H 2017 1H 2016 Change Corporate revenue • Revenue from the Group’s corporate stores
Revenue 289.8 209.3 38.5%
Cost of Sales (184.7) (135.0) 36.8% • Consists of revenue from commissary sales to
Franchise revenue franchise stores and royalties calculated based on
Gross Profit 105.1 74.2 41.6% and royalty franchise store sales to customers, including the
contribution to national advertising
General Administrative Expenses (44.3) (33.9) 30.6%
Marketing and Selling Expenses (41.3) (30.1) 37.0%
• Corporate store costs; production related costs of
Other Operating Income / (Expense) (0.9) 1.2 n.m. the Group’s commissaries, such as merchandise
and raw materials; ingredients and non-food items
Operating Profit 18.6 11.4 63.7% Cost of sales
(including those sold to the Group’s sub-
Foreign Exchange (losses)/gains (7.3) 5.5 n/a franchisees); labour; rent; utilities and other,
including D&A of corporate stores and commissaries
Financial Income 0.4 0.1 n/a
Financial Expense (10.0) (7.9) 27.2%
• Consists of headquarters expenses such as
Profit / (Loss) Before Tax 1.7 9.1 n/a General and personnel (excl. marketing and selling personnel),
Tax Expense (3.8) (2.2) 71.4% administrative rent, utilities, commissaries’ rents and non-
expenses production related personnel and headquarters-
Net Income (2.1) 6.9 n/a related D&A expenses
EBITDA 37.9 27.0 40.3%
• Includes marketing and selling personnel costs,
Marketing and
Adjusted EBITDA 39.4 31.2 26.4% royalties paid by the Group (on-going fees) and
selling expenses
promotion and advertising expenses
Adjusted net income (0.8) 11.0 n/a
Source: Company Information, IFRS Combined and Consolidated Financial Information, Management Accounts
Notes:
1. One-off items include activities that are not part of the normal course of business and are non-recurring including share-based incentives, IPO costs and severance costs for Turkey and Russia 28Exchange Rates
Year ended 31 December
2017 2016
Currency Period End Period Average Period End Period Average
EUR/TRY 4.516 4.116 3.710 3.338
RUB/TRY 0.065 0.062 0.057 0.045
EUR/RUB 68.867 65.901 63.811 74.231
Source: Company Information
29Delivery – Take-away/Eat-in mix
% of system sales
Turkey Russia
37% 37% 38% 40%
63% 63% 62% 60%
2016 2017 2016 2017
Delivery Take-away/Eat-in Delivery Take-away / Eat-in
Group
37% 38%
63% 62%
2016 2017
Delivery Take-away / Eat-in
Source: Company Information
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