Pizza company DP Eurasia to stay in Russia, cannot give 2022 outlook By Reuters

By Anna Pruchnicka

(Reuters) – DP Eurasia, which runs the Domino’s Pizza (NYSE:) brand in Turkey and Russia, said it plans to stay in Russia, but could not give an outlook for the full year because of uncertainties linked to the war in Ukraine and inflation.

As many international companies limit their exposure to Russia following the launch of what it describes as a “special military operation” on Feb. 24, DP Eurasia said last month it would limit further investment in the country.

However, CEO Aslan Saranga told Reuters on Tuesday the company planned to continue to operate in Russia and that it had a responsibility to stakeholders.

“We have franchisees over there, half of the stores, even if you want to close these stores, we cannot,” he said.

The company said it could not give an outlook for 2022, citing uncertainties over the impact of the Ukraine conflict and high inflation in Turkey.

DP Eurasia, the largest pizza delivery company in Turkey and the third largest in Russia, has 188 stores in Russia and Saranga said it had not seen any major change in consumer demand since the start of the war in Ukraine.

It has about 3,000 employees in the country, compared to about 10,000 in Turkey, Saranga said.

The company’s full-year adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 58.5% to 208.4 million Turkish lira ($14.19 million), driven by a strong performance in Turkey and recovery in Russia.

It returned to a positive like-for-like growth rate of 9.6%, helping it to improve adjusted EBITDA by 907% in Russia.

Russia is its second-biggest market, representing 26% of its system sales, which comprise sales both from its own and franchised stores.

DP Eurasia, which also operates in Azerbaijan and Georgia, announced the launch of a new coffee shop and product brand, COFFY and has opened 11 stores in Turkey.

Saranga said the company tested the format during the pandemic and added the coffee is 30%-40% cheaper than its competition.

“The launch of a new coffee shop brand, COFFY, in Turkey is an exciting development and allows DPEU to leverage its existing infrastructure,” Liberum analysts wrote in a note.