Domino’s Pizza Enterprises reported a 5.5% revenue decline to $1.1 billion for the half-year ended December 2025 but achieved a 2.2% rise in underlying net profit after tax to $60.1 million, driven by franchisee-focused initiatives and cost reductions.
- Revenue down 5.5% to $1.1 billion
- Underlying net profit after tax up 2.2% to $60.1 million
- Refinanced $1.05 billion in debt, reducing total debt by $196 million
- Strategic reset focused on franchisee unit economics and pricing simplification
- Declared unfranked interim dividend of 25 cents per share
Mixed Financial Performance Amid Strategic Reset
Domino’s Pizza Enterprises Limited (ASX: DMP) has released its half-year results for the period ending 28 December 2025, revealing a nuanced financial picture. While revenue declined by 5.5% to $1.1 billion, the company managed to increase its underlying net profit after tax by 2.2% to $60.1 million. This divergence underscores the impact of a deliberate strategic reset aimed at strengthening franchisee economics and streamlining operations.
The revenue dip primarily reflects softer same store sales, which fell by 2.5%, and a 1.6% reduction in network sales. Despite this, disciplined cost management and targeted initiatives helped lift franchisee profitability by 4.5% year-on-year, with average franchisee EBITDA reaching $103,000 across the global network.
Regional Performance and Operational Highlights
Performance varied across Domino’s key markets. In Australia and New Zealand, the company executed a pricing reset, reducing reliance on national discounting to improve franchise partner returns. This approach moderated volumes and earnings in the short term but improved store-level profitability, setting a foundation for future growth.
Europe showed mixed results: Benelux and Germany delivered earnings growth supported by disciplined pricing and higher average transaction values, while France experienced a decline in sales due to fewer customer transactions. In Asia, revenue fell 14.7%, with Japan and Taiwan facing challenges from reduced promotional activity and store closures, though Malaysia posted positive EBIT growth thanks to product and cost initiatives.
Cost Reduction and Debt Refinancing
Domino’s progressed its global cost reduction program, implementing $55 million in initiatives to date and anticipating annualised savings of $20–30 million in FY26. These savings helped offset transitional impacts from pricing and network changes, supporting both franchisee economics and cash flow.
On the capital front, the Group refinanced $1.05 billion in debt facilities, extending maturities with a weighted average tenure of 4.5 years and reducing total debt by $196.1 million. The refinancing also secured improved pricing terms, lowering interest margins and enhancing financial flexibility.
Significant Items and Legal Proceedings
The half-year results included $27.4 million in significant items, encompassing costs related to store closures, employee terminations, legal proceedings, and the disposal of the non-core Impressu Print Group subsidiary. Legal challenges remain a notable risk, with ongoing litigation in France involving Speed Rabbit Pizza and class actions in Australia, including a franchisee employees’ claim and a shareholder class action. The company is vigorously defending these claims but has not recognised provisions for potential liabilities at this stage.
Dividend and Outlook
The Board declared an unfranked interim dividend of 25.0 cents per share, payable on 30 April 2026, with a dividend reinvestment plan available at a 1% discount. Looking ahead, Domino’s remains focused on disciplined execution of its reset strategy, prioritising franchisee unit economics, operational simplification, and selective capital allocation to drive sustainable growth.
Bottom Line?
Domino’s strategic reset and refinancing provide a solid platform, but ongoing legal risks and regional performance disparities warrant close investor attention.
Questions in the middle?
- How will Domino’s manage the ongoing legal proceedings and their potential financial impact?
- Can the company restore consistent same store sales growth across all regions, especially in Japan and France?
- What is the timeline for fully realising cost savings and franchisee profitability improvements from the reset strategy?