Telepizza: Announces Q3-2016 Results

Madrid / ES. (tp) Spain’s Telepizza Group S.A., the leading pizza delivery in Iberia and Latin America, in november announced the results for the third quarter of 2016. In the third quarter 2016, the Group has recorded constant currency chain sales growth of 5.3 percent in our Core Geographies (excluding Master Franchises), driven by a 3.2 percent LFL growth, translating into 7.4 percent Group Underlying Ebitda growth for the Period.

Spain chain sales grew by 2.6 percent in Q3, supported by 16 new store openings (and 21 overall in Core Geographies) over the Period. As indicated in the H1 Results, the Company has faced a high comparator in Q3, with Spain LFLs in Q3 2015 of 7.2 percent (the highest since 2007) and in Q3 2016 of 0.6 percent. Our two-year LFL Spain chain sales growth in Q3 was 7.9 percent, compared to 6.7 percent in H1.

Digital sales continue to drive the Delivery channel, accounting for 37 percent of Delivery sales in Spain in September, with 55 percent already placed through the App or mobile website. Nick Dutch has been appointed as new Group Head of Digital, effective 1st December. A separate press release regarding his appointment has been published today.

The Non-delivery channel remains subject to competitive pressures, which Telepizza is addressing through a revised commercial policy, new product launches and an acceleration of the Refurbishment plan, with 52 more stores having been refurbished in Q3 at Group level.

In October, Spain LFL sales are growing at a faster pace than previous months, with the initial weeks of the newly launched Barbecue Gourmet pizza producing strong results.

Core International (excluding Master Franchises) chain sales grew 11.4 percent in constant currency in Q3, with a like-for-like growth of 9.0 percent, the highest on record for the segment. The performance was strong across all international geographies, with Portugal being the best performing country, supported by a reduction in applicable VAT since 1st July.

Group Underlying Ebitda increased by 7.4 percent in Q3, driven by sales growth in the International segment, average ticket increases in Spain and operating leverage, partially offset by increased levels of service. As raw material prices already decreased from Q3 2015, there was a lower benefit year-on-year from input prices in the Period, compared to H1 2016.

Commenting of the results, Pablo Juantegui, Chairman and Chief Executive Officer of Telepizza, said: «I am pleased that Telepizza has delivered its tenth consecutive quarter of growth in Spain in Q3, at a time when our International business is growing at record levels, providing robust and diverse sources for a continued growth of the Group. Digital is critical to the growth of our core Delivery channel and I am delighted to welcome Nick Dutch to the Group, as I am confident that he is an excellent fit with Telepizza’s culture and that he will drive the acceleration of our Digital penetration».

Outlook

In light of the initial results of our new commercial policy in Spain and the strong momentum in International, we expect to deliver total chain sales growth for the full year 2016 towards the upper end of the guidance provided in the H1 Report. It is expected that our new commercial policy will result in a gross margin contraction in Q4 2016, partially offset by operating leverage, to deliver double digit Ebitda growth for the Group in the FY 2016. Our full year guidance of 80 net new stores in Core Geographies has risk to the downside, but we expect Q4 to be our most active quarter this year in terms of store openings.

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