Domino's shares plummet 20 per cent

Domino's Pizza general manager Scott Bush (left) along with the mascot and group CEO of Don Meij. Photo / Nick Reed

Domino's Pizza Enterprises last almost 20 per cent of its market value yesterday as investors reacted negatively to a lower-than-expected annual result.

The pizza company posted net profit after tax of A$118.5 million ($128.2m). Although up 28.8 per cent on the previous year, the result missed the company's earnings and sales targets.

Domino's had previously forecast an earnings rise of 32.5 per cent. Same-store sales in Australia and New Zealand rose 13.6 per cent, compared to guidance of 14 per cent to 16 per cent.

Group chief executive Don Meij said although the result was good, the company had faced issues in Europe.

"We did a lot of heavy lifting this year, and we had a couple of stumbles," Meij said.

"We had a slip-up in France, where it took us longer to roll out this technology, it's now fixed.

"We also launched a value promotion there, which didn't connect with consumers. [That] also hurt our sales."

But Meij said he was happy with the result.

Investors were quick to react, however, and shares fell from $51.11 a share to $40.28 within the first half hour of trading, wiping almost $1 billion from the company's market capitalisation.

Shares recovered slightly over the day to close down 18.8 per cent at $41.50.

Despite this, Meij said the company was on track with its New Zealand division continuing to perform well.

"We have a record store count in New Zealand and it's continuing to grow at a healthy rate," Meij said.

"We sell more Domino's pizza in Australia and New Zealand than anywhere else in the world and we're still growing at a rapid rate.

"We're going to hit 200 stores in New Zealand, we have about 112 today so that's quite significant."

The company's drone delivery business Flirtey is also in the process of building a vehicle capable of carrying heavier loads.

Meij said the technology being rolled out in New Zealand would one day be available throughout the whole business.

Domino's also announced a $300 million share buyback, funded by new and existing debt, which it said would return capital to shareholders and increase the efficiency of its balance sheet.

It would pay a dividend of 44.9c per share, giving shareholders a full year dividend of 93.3c a share.