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Domino’s Pizza writes down international businesses by £35mln

The Norwegian business was offloaded last month while the issues with UK franchisees remain

Domino's Pizza Group PLC -

Domino’s Pizza Group PLC (LON:DOM) dropped as it said operations in Iceland, Sweden, Switzerland and Norway have been written down by £35mln.

The fast food chain decided last year to offload its international arms as they were unprofitable.

READ: Domino’s moves into 'giveaway' pizza business as it pays to offload Norwegian arm

Last month, the pizza franchise agreed to pay two shareholders £10mln to take over the Norwegian business, while the other three countries remain up for sale - or giveaway.

In the year to 29 December, the four businesses made an underlying loss of £21mln, three-fold wider than 2018.

Domino’s has a minority stake in a German venture which yielded a £3mln profit, up 13% from 2018.

The core businesses of UK and Ireland saw underlying profit inching up 1% to £102mln.

Group revenue rose 3% to £508mln while profit before tax tanked 14% to £75mln, due to a £19mln impairment on its London corporate store estate.

UK franchisee issues

"The write-down of half the London estate raises questions not just on its failed strategy, but on its potentially contradictory stance on franchisee negotiations," analysts at Liberum said in a note.

"The company has not provided any guidance on UK store openings or on the timing of the resolution to the franchise dispute."

The firm is looking to replace the long-standing chairman and chief executive after they announced their departure last year amid a row between Domino’s and its franchisees, who run most of its 1,100 stores, over how profits are shared.

The friction is still ongoing, affecting regular operations leading to lower store openings and national promotions not being supported, while food delivery competition grows.

"A solution needs to ensure the future interests of Plc & franchisees are aligned," Liberum added, "we remain of the view that a fundamental strategy revision is required which could potentially lead to forecast cuts."

Shares dropped 3% to 296.8p on Thursday morning.

--Adds detail, analyst's comment, shares--

Quick facts: Domino's Pizza Group PLC

Price: 278.8 GBX

LSE:DOM
Market: LSE
Market Cap: £1.29 billion
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