The Woolworths Group Ltd (ASX: WOW) share price is taking a beating today.

Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $35.87. In late morning trade on Wednesday, shares are swapping hands for $33.48 apiece, down 6.7%.

For some context, the ASX 200 is down 0.4% at this same time.

Here’s what’s spooking investors today.

ASX 200 investors hitting the sell button

ASX 200 investors are pressuring the Woolworths share price today following the release of the company’s half-year results (1H FY 2024) and the unexpected departure of CEO Brad Banducci.

First, a look at those financials.

On the plus side, revenue increased by 4.4% from 1H FY 2023 to $34.64 billion.

And the fully franked interim dividend of 47 cents per share was up 2% from last year’s interim dividend.

On the negative side of the ledger, losses after significant items came in at $781 million. That compares to a profit of $845 million in 1H FY 2023. Most of those losses relate to the $1.5 billion non-cash write-down of the supermarket’s New Zealand business.

Woolies alerted the market to that write-down last month, though the half-year losses are larger than consensus expectations.

Also likely spooking investors today was the company’s warning that sales over the first seven weeks of 2024 (2H FY 2024) have continued to moderate. Management noted that consumers are becoming more cautious, which could see ongoing pressure on the company’s sales.

Woolies says goodbye to Banducci

In a bombshell announcement that’s also likely throwing up headwinds for the Woolworths share price today, CEO Brad Banducci will step down from his role after more than 13 years with the company and more than eight years at its helm.

Banducci will stay on until 1 September. Amanda Bardwell, who’s been leading WooliesX will replace Banducci as the new CEO of Woolies.

“Amanda is a proven leader, business builder and modern retailer. Most recently, under her leadership, WooliesX has gone from infancy in 2015 to a $7bn market leading business,” Woolworths chair Scott Perkins said.

As for Banducci’s departure, Perkins added:

The test of any CEO is to leave the business in much better shape than when they started. On that simple metric, history will judge Brad to have been one of Woolworths Group’s finest leaders.

Woolworths share price snapshot

With today’s big intraday fall factored in, the Woolworths share price is down 11% in 2024.

Longer-term, shares are up 38% over five years, not including the company’s dividend payouts.

The post Woolworths share price dives 7% following Banducci bombshell appeared first on The Motley Fool Australia.

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More reading

• Woolworths shares on watch after CEO exit and $781 million loss
• If I invest $10,000 in Woolworths shares, how much dividend income will I receive in 2024?
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• Buy these top ASX 200 stocks for 18%+ returns
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Corporate Travel Management Ltd (ASX: CTD) share price is falling off a cliff on Wednesday amid its FY24 first-half results.

Shares in the travel management solutions company are down 18.5% to $16.18 this morning. At one point the share price reached $15.82 soon after opening, equating to a 20% fall.

Corporate Travel share price craters on mirky results

• Revenue up 25% from the prior corresponding period to $363.7 million
• Underlying EBITDA up 96% to $100.7 million
• Underlying net profit after tax (NPAT) up 162% to $57.9 million
• Statutory NPAT up 222% to $50.4 million
• Interim unfranked dividend of 17 cents per share, up from 6 cents

What happened in the first half?

For the six months ended 31 December 2023, Corporate Travel Management enjoyed a self-described record half.

Despite a minimal recovery in the global travel market, the company notched up its revenue by 25%, mainly from market share gains. For example, $630 million worth of new clients were won, outpacing the industry.

The outsized growth in earnings relative to revenue was achieved through ‘improving efficiency and controlling costs’.

Looking at the performances of the different regions that Corporate Travel Management operates in, it quickly becomes apparent there were some mixed results.

Revenue growth was subdued in North America and Australia and New Zealand (ANZ). Meanwhile, Europe and Asia experienced exceptional increases, with both regions posting record EBITDA. According to the report, Europe operations benefit from the company’s proprietary technology in over 90% of online transactions.

Outlook for the company

Corporate Travel Management laid out a couple of items that are expected to impact its previous forecasts. With a combination of ‘macro issues’ and material underperformance of its United Kingdom Bridging contract, the company is eyeing a $40 million EBITDA headwind in FY24, as shown below.

As a result, FY24 guidance has been updated to the following:

• Revenue between $730 million to $760 million, suggesting a 15% increase at the midpoint
• Underlying EBITDA between $210 million to $230 million, suggesting a 31.7% increase at the midpoint
• Underlying NPAT between $125 million to $140 million

Importantly, it was noted the above detracting factors are out of the company’s control.

What else?

Lastly, a five-year growth plan was unveiled in today’s results. The newly devised strategy aims to double FY24 profits organically by FY29. To do this, Corporate Travel Management plans to apply the following five priorities:

• Revenue growth of more than 10% per annum over five years
• Client retention of 97% per annum
• Further improvements to productivity and innovation
• EBITDA growth above revenue growth, converting 50% of new revenue into EBITDA
• Acquisitions to provide growth in addition to organic goals

The Corporate Travel Management share price is down 9% compared to a year ago.

The post Corporate Travel share price plunges 18% despite tripling net profits appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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National Australia Bank Ltd (ASX: NAB) shares are pushing higher on Wednesday morning.

At the time of writing, the banking giant’s shares are up 1% to a 52-week high of $33.85

Why are NAB shares rising?

Investors have been buying the bank’s shares this morning after responding positively to its first-quarter update.

For the first quarter, NAB reported cash earnings of $1.8 billion, which represents a 16.9% decline compared to the prior corresponding period.

However, this was better than the market was expecting, which explains why its shares are rising today.

Goldman Sachs was pleased with the update, noting that NAB is on course to at least deliver on its estimates during the first half of FY 2024. It said:

NAB has released its 1Q24 trading update, with unaudited cash earnings from continuing operations of A$1.8 bn, down -3% on the 2H23 quarterly average, but run-rating in-line with what was implied by our prior 1H24E forecasts. PPOP was 1% ahead of what was implied by our prior 1H24E forecasts, driven by lower expenses, and while BDDs were also lower, this was offset by a higher tax rate.

In response to the update, the broker has reiterated its buy rating with an improved price target of $33.73 (from $31.17). Though, it is worth noting that NAB shares have just pushed beyond this price target.

Goldman concludes:

We reiterate our Buy on NAB given: i) while lending competition remains, it has been skewed more heavily towards housing as opposed to business, which should benefit NAB’s relative earnings mix, ii) NAB has delivered the highest levels of productivity over the last three years and its investments continue to yield benefits (A$400 mn of productivity expected in FY24E), which we think leaves it well positioned for an environment of elevated inflationary pressure, which was evidenced in 1Q24, and iii) despite being overweight SME lending, which is inherently riskier than housing, NAB remains well provisioned (CP/RWA ratio above peer levels) and asset quality remains strong, which management attributed to the quality of its book and its security.

The post NAB shares hit 52-week high on first-quarter earnings beat appeared first on The Motley Fool Australia.

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• NAB share price on watch following Q1 update
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Santos Ltd (ASX: STO) share price has slipped into the red after the ASX oil share reported its FY23 result on Wednesday morning. Shares are trading down 1% at $7.33 at the time of writing.

Santos share price falls after weak result

• Sales revenue dropped 24% to US$5.9 billion
• EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment) down 28% to US$4.1 billion
• Free cash flow from operations down 42% to US$2.1 billion
• Underlying net profit after tax (NPAT) down 42% to US$1.4 billion
• Statutory NPAT declined 33% to US$1.4 billion
• Final dividend of US 17.5 cents, up 16%

Santos advised that total revenue declined due to lower volumes and realised prices for its production. It also reported its unit production costs rose by 11% to US$7.61 per barrel of oil equivalent.

What else happened in FY23?

Santos reported that the Barossa gas project was now 67% complete, with the first gas expected in the third quarter of 2025. The pipeline that will deliver gas from the field to Darwin LNG was 68% complete, and more than 50% of the pipe had been laid.

The first Barossa well has been completed, and the second well is underway. Initial well flow rates are “in line with expectations”.

When complete, Barossa is expected to add 1.8 million tonnes per annum to the company’s LNG portfolio. The Santos share price has been affected by various stages of the Barossa project’s progress and environmental attention.

Regarding the Pikka project, Santos said phase one was now more than 40% complete, with first oil expected in the first half of 2026.

The ASX oil share also said that phase one of the Moomba carbon capture and storage project “remains on track” for the first injection in mid-2024.

What did Santos management say?

Santos managing director and CEO Kevin Gallagher said:

Today’s results demonstrate the capability of Santos to generate strong cash flow, develop major projects and deliver sustainable shareholder returns.

Our critical fuels are a necessary component in the energy security of Australia and Asia, and will be required to provide affordable and reliable energy whilst the world transitions to lower-carbon alternatives.

What’s next for Santos?

The ASX oil share provided guidance for 2024. It expects to produce between 84 to 90 million barrels of oil equivalent (mmboe). Sales volume is expected to be between 87 to 93 mmboe.

Santo expects capital expenditure related to sustaining capital, including decommissioning, to be around US$1.25 billion. Major project capital expenditure, including Santos Energy Solutions, is expected to be around US$1.6 billion.

The company’s guides for unit production costs are between US$7.45 to US$7.95 per barrel of oil equivalent.

Santos share price snapshot

Prior to today’s movements, the Santos share price had climbed 8.7% over the past year, compared to a 3.8% rise for the S&P/ASX 200 Index (ASX: XJO).

The post Santos share price slips on 42% profit drop in FY23 result appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Passive income is a key goal of mine, and I’m now receiving a sizeable sum of annual dividends.

However I started with $0 several years ago, and it took time to grow.

It has been a volatile journey, and there were some dud investments along the way. But, I’m pleased with how things are going.

I’d say there are three things that have helped get me to more than $5,000 of annual passive income.

Regularly investing

It takes money to make money, including with the ASX share market. Compounding is a powerful tool, but I needed to add snow to the money snowball which can make it grow faster.

I’ve tried to invest in the ASX share market every month, with the size of the investment depending on how my household’s income and expenses play out each month.

Everyone’s finances are different, but let me demonstrate what investing $1,500 per month can do – if the portfolio returns an average of 10% per annum and grows for 10 years, the portfolio would become worth $287,000. My portfolio is worth nowhere near as much as that, but I can see how much growth can help my portfolio’s returns in the future.

A $287,000 portfolio with a 5% dividend yield would make $14,350 of annual dividends.

Choose businesses with growing passive dividend income

I have filled my portfolio with businesses that can deliver dividend growth and hopefully capital growth themselves. By making those picks, I believe that will mean I need to contribute less of my own money.

For example, in my portfolio, I own ASX dividend shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and L1 Long Short Fund Ltd (ASX: LSF), which have been building a reputation for passive income growth.

Long-term dividend growth is an attractive feature. Annual dividend income of $100 which grows by 10% thanks to a dividend increase reaches $110 next year. That doesn’t sound like much.

Fast forward to receiving $5,000 of annual income – a 10% rise would take that to $5,500. That’s a lot of extra cash flowing in for one year.

That’s why I like looking at businesses that have a habit of delivering good dividend growth.

Investing during market dips

As I’ve mentioned, I do regularly invest every month. I’ve significantly increased the size of my investments when share prices drop heavily.

Low share prices can boost the dividend yield from ASX dividend shares. For example, if an investment has a 5% dividend yield and the share price drops 30%, the yield (for new investors) is boosted to 6.5%.

I invested heavily during the 2020 COVID-19 crash and during 2022 to supercharge my dividend income, with a particular focus on the listed investment company (LIC) WAM Microcap Limited (ASX: WMI). I like the growth potential of ASX small-cap shares, and the LIC normally pays a large dividend yield to shareholders.

Recently, I have been investing in a number of S&P/ASX 200 Index (ASX: XJO) shares that I think have long-term (passive dividend income) potential.

The post How I built $5,000 of passive income starting with $0 appeared first on The Motley Fool Australia.

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• Owners of Brickworks shares haven’t seen a dividend cut for 47 years!
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Motley Fool contributor Tristan Harrison has positions in Brickworks, L1 Long Short Fund, Wam Microcap, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Earnings season has gone up a gear on Wednesday with a large number of results being released to the market.

Four results from the ASX 200 REIT sector that have dropped today are summarised below. Here’s how they performed during the half:

Charter Hall Group (ASX: CHC)

The Charter Hall share price is down 0.5% to $12.01. This morning, the property company reported operating earnings of $195.1 million and operating earnings per share of 41.2 cents. This was broadly in line with expectations, which has allowed management to reaffirm its guidance for FY 2024 operating earnings per share of 75 cents per share. Charter Hall is paying an interim distribution of 22.1 cents per share.

National Storage REIT (ASX: NSR)

The National Storage share price is down 0.5% to $2.31. This self-storage provider released its half-year results and reported a 6% increase in underlying earnings per share to 5.6 cents. This has allowed the company to reaffirm its FY 2024 underlying earnings per share guidance of at least 11.3 cents. Management has also reaffirmed its plan to distribute 90% to 100% of underlying earnings this year.

Scentre Group (ASX: SCG)

The Scentre share price is up 2% to $3.04. This morning, this shopping centre operator released its full-year results and reported a 2% increase in revenue to $2,510.3 million and a 16.7% lift in profit after tax to $1,069 million. In 2023, the company welcomed 512 million customer visits to its Westfield destinations and its business partners achieved sales of $28.4 billion. Scentre is paying a final dividend of 8.35 cents per share.

Stockland Corporation Ltd (ASX: SGP)

The Stockland share price is up 0.5% to $4.63. This follows the release of the ASX 200 REIT’s half-year results. Stockland reported statutory profit of $102 million, compared with $301 million a year earlier. In addition, the company’s funds from operations (FFO) came in at $266 million versus $353 million in the prior corresponding period. This reflects the material skew in Masterplanned Communities (MPC) settlement volumes to the second half. Stockland is paying a first-half distribution per share of 8 cents.

The post Here are 4 ASX 200 REITs results catching the eye on Wednesday appeared first on The Motley Fool Australia.

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• 3 high-quality ASX 200 dividend shares to buy for a second income
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The WiseTech Global Ltd (ASX: WTC) share price is charging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) tech stock closed yesterday trading for $79.85. In morning trade on Wednesday, shares are swapping hands for $86.50, up 8.3%.

For some context, the ASX 200 is down 0.5% at this same time.

This follows the release of WiseTech’s half-year financial results for the six months ending 31 December (1H 2024).

WiseTech share price leaps on earnings boost

• Revenue of $500 million, up 32% from 1H 2023
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of 230 million, up 23% year on year
• Underlying net profit after tax (NPAT) of $128 million, up 5% from 1H 2023
• Interim fully franked dividend of 7.7 cents per share, up 17%

What else happened during the first half for WiseTech?

One of the biggest events during the half-year was WiseTech’s acquisition of MatchBox Exchange in October. The company notes this has further enhanced its CargoWise Landside Logistics.

And the WiseTech share price may be getting a boost from the 40% year on year increase in CargoWise revenue, which reached $421 million for the six months. This was driven by recent M&A as well as customer growth, including new Large Global Freight Forwarder (LGFF) rollouts.

In other strong financial metrics, the EBITDA margin of 46% came in ahead of expectations.

And the company reported a 13% increase in free cash flow from the prior corresponding half-year to $155 million.

As at 31 December, WiseTech had a total liquidity of $445 million from cash and undrawn debt facilities.

And the logistics software provider boosted its R&D investments by 54% year on year to $178 million, or 35% of total revenue. This helped deliver 576 new product enhancements over the six months.

On the cost front, WiseTech’s efficiency program was reported to be on track to deliver $15 million in net savings in FY24. The company is aiming for $40 million in annual savings.

What did management say?

Commenting on the results lifting WiseTech share price today, CEO Richard White said:

We continue to focus on enhancing our core CargoWise platform in pursuit of our vision to be the operating system for global logistics. Innovation remains a critical driver of our growth.

We have increased our investment in research and development over the last five years, investing over $1 billion to deliver more than 5,500 product enhancements which creates substantial value for our customers and underpins revenue growth…

Adding to our list of Top 25 Global Freight Forwarders, we have secured a CargoWise global rollout with Sinotrans, bringing our penetration of the Top 25 Global Freight Forwarders to 13, which is more than half of the Top 25. We also secured large global freight forwarder rollouts with APL Logistics and Yamato Transport, taking us to 49 LGFFs overall.

What’s next?

Looking at what might impact the WiseTech share price in the months ahead, the company reaffirmed its FY 2024 guidance range for revenue of $1.04 billion to $1.10 billion, an annual growth rate of 27% to 34%.

FY 2024 EBITDA is forecast to be in the range of $455 million to $490 million, with an annual growth rate of 18% to 27%.

And WiseTech lifted its full year EBITDA margin guidance range to between 44% and 46%, following on the EBITDA margin strength of the half year just past.

“Our highly cash-generative business model and strong liquidity continue to provide a solid platform to fund long-term sustainable growth,” White said.

WiseTech share price snapshot

The WiseTech share price is up 55% in 12 months.

So far, in 2024, the ASX 200 tech stock has gained 13%.

The post WiseTech share price leaps 8% today as revenues surge appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Commonwealth Bank of Australia (ASX: CBA) share price is having a tough time on Wednesday.

In morning trade, the banking giant’s shares are down 2.5% to $114.10.

Why is the CBA share price sinking today?

Don’t worry, today’s weakness is not because of a bad update or a broker downgrade.

In fact, today’s decline could be classed as good news for investors.

That’s because the company’s shares are falling on Wednesday after trading ex-dividend for its upcoming interim dividend.

When a share goes ex-dividend, it means the rights to the forthcoming payout are now settled.

Basically, anybody that buys shares today will not receive the bank’s dividend when it is paid next month. Instead, it will go to the seller of its shares even though they don’t own them on the payment date.

In light of this, a share will usually drop in line with the value of the dividend to reflect this. After all, a dividend is part of a company’s valuation and you wouldn’t want to pay for something you won’t receive.

The CBA dividend

Last week, CBA released its half-year results and reported a 0.2% lift in operating income to $13,649 million and a 3% decline in cash net profit after tax to $5,019 million.

Despite this earnings decline, the CBA board elected to increase its interim dividend to a fully franked $2.15 per share. This was a 2.4% increase on last year’s dividend and meant a payout ratio of 72% (from 68% a year earlier).

Eligible shareholders can now look forward to receiving this payout next month on Thursday 28 March.

What’s next?

According to a note out of Goldman Sachs, its analysts expect a fully franked final dividend of $2.40 per share in August. This will bring its FY 2024 dividend to $4.55 per share.

The post Why is the CBA share price sinking on Wednesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Rio Tinto Ltd (ASX: RIO) shares are falling on Wednesday morning.

At the time of writing, the mining giant’s shares are down 2.5% to $124.90.

Why are Rio Tinto shares falling today?

Investors have been selling the company’s shares today after significant iron ore price weakness offset the release of an announcement ahead of its full-year results release tonight.

The benchmark iron ore price fell 5% overnight ti US$120.85 a tonne.

This has overshadowed news that Rio Tinto has signed Australia’s largest renewable power purchase agreement (PPA) to date to supply its Gladstone operations in Queensland.

According to the release, the 25-year agreement will see the company buy the majority of electricity from Windlab’s planned 1.4GW Bungaban wind energy project.

Combined with last month’s PPA for the Upper Calliope solar farm in Queensland, Rio Tinto will be the biggest industrial buyer of renewable power in Australia.

Rio Tinto will be buying 80% of all power generated from the Bungaban wind energy project over 25 years, with the remaining 20% of the project’s generated electricity supplying Australia’s National Electricity Market. The project is targeted to start in late 2025 and is expected to produce electricity by 2029.

Management notes that it is another major step in the work to repower the company’s Gladstone production assets, the Boyne aluminium smelter, Yarwun alumina refinery, and Queensland Alumina refinery.

Rio Tinto’s Chief Executive, Jakob Stausholm, was pleased with the agreement. He said:

This agreement with Windlab builds on our momentum in our work to repower our Gladstone operations and provide a sustainable future for heavy industry in Central Queensland. The task remains challenging, but we have a pathway to provide the competitive, firmed power our Gladstone plants need and we are continuing to work hard with all stakeholders, including the Queensland and Australian governments, on getting there.

Competitive capacity, firming, and transmission, are critical to developing a modern energy system that can ensure more large-scale renewables development in Queensland and help guarantee the future of Australian industry.

The post Rio Tinto shares tumble despite massive renewable power agreement appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is charging higher on Wednesday.

In morning trade, the pizza chain operator’s shares are up 4% to $41.30.

This follows the release of the company’s half-year results.

Domino’s share price higher on half-year results

• Network sales up 8.8% to $2.14 billion
• Same Store Sales growth of 1.25%
• Online sales up 11.8% to $1.71 billion
• Earnings before interest and tax (EBIT) down 5.3% to $107.9 million
• Net profit after tax down 13% to $62.3 million
• Unfranked interim dividend down 18.4% to 55.5 cents per share

What happened during the half?

For the six months ended 31 December, Domino’s reported an 8.8% increase in sales to $2.14 billion. This reflects a 1.25% increase in same store sales and an 11.8% lift in online sales.

The star of the show for the company was its Australia and New Zealand segment, which delivered its strongest top line growth in six years. This helped offset the previously disclosed significant weakness in Asia, which recorded an 8.9% decline in same store sales.

Things weren’t quite as positive on the bottom line, with Domino’s posting a 13% decline in net profit after tax to $62.3 million. Once again, it was the company’s Asia operations weighing on its performance. ANZ EBIT was largely flat, Europe EBIT rose 41.5%, and Asia EBIT sank 42.5%.

In light of its earnings decline, the Domino’s board elected to cut its interim dividend by 18.4% to 55.5 cents per share.

Management commentary

Domino’s Group CEO and Managing Director, Don Meij, acknowledged that it wasn’t a strong half but remains positive on the future. He said:

Today’s results show we are rebuilding, and the sales initiatives we have applied in Australia/New Zealand are getting traction in some of our international markets. They also show more is required to get the same results across all 12 of our markets.

The past 12 months have reinforced the importance of launching inspired new products, designed for delivery, to give customers more choice on more occasions – whether it’s a family bundle, a lunchtime offering, or an on-the-go snack. Our approach is unchanged; the difference in our performance across markets is our execution.

Outlook

One thing that is likely to be giving the Domino’s share price a lift today is management’s outlook commentary.

It notes that recent trading has demonstrated Domino’s successful approaches in one market have applications across multiple markets.

For the first seven weeks of the second half, its same store sales growth is as follows:

• ANZ up 8.39%
• Europe down 0.64%
• Asia up 0.34%

In respect to the Asia market, same store sales are now positive in the troubled Japan business (+6.7%). This could be a sign that the company has managed to turn around its fortunes at last.

Mr Meij concludes:

As we work to serve our customers across different countries, cultures and taste preferences, our customers share a common desire for high quality meals, delivered fast, at an affordable price. We believe Domino’s is well placed for this future, and we will work hard to deliver.

The post Domino’s share price charges higher on improving outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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