Pizza giant Domino's is committed to increasing its footprint in its struggling French, Japanese and Malaysian markets, despite a slow start to the financial year.
The Australian-based offshoot of the American fast food chain on Wednesday reported a 1.9 per cent drop in underlying net profit after tax to $120.4 million for the 2024 financial year.
The company's group earnings grew three per cent to $207.7 million, which was below consensus expectations.
Sales also came in below expectations and softer trading during the start of the 2025 financial year will lead to further downgrades in analyst estimates, E&P retail analyst Phillip Kimber said.
Domino's shares plunged five per cent in early trading to $31.74, which is down almost half since the start of 2024.
The company's Asian businesses continued to struggle, weighed down by Japan - which lifted profitability from a low base - and Malaysia, where customers have dumped well-known American brands such as Coca-Cola and Domino's as a result of the United States' support of Israel in its war in Gaza.
France, the company's other enfant terrible, underperformed as well.
In response to sagging sales, Domino's cut costs and closed stores in France and Japan, unearthing $50 million in savings in 2024, to be reinvested in growing profitability in those countries.
Chief executive Don Meij expects another $30 million of savings to come in FY25.
"If we're completely transparent, we didn't get the first phase of inflation right," he told AAP.
"We just weren't ready for those sort of increases, of the scale of those increases."
Mr Meij saw promising signs in the company's turnaround plans for France and Japan and was "absolutely" still intent on increasing store footprint in both markets.
But the global expansion plans of Domino's Pizza Inc - the Australian company's US-headquartered partner - have taken a hit.
In July, Domino's Pizza Inc suspended its guidance of increasing store count by 1,100 by 2028, citing the Australian franchise's slower store growth.
In their earnings statement, it said it was "partnering closely with (the Australian arm) as they work through this process".
Mr Meij said it was just a matter of giving the Americans more transparency about the Australian company's plans.
Overseas growth might be a struggle but the company's Australian and New Zealand operations have prospered, with underlying earnings before interest and tax up 10.4 per cent to a record $124.1 million.
New products targeting the lunch and snacking segments, such as Meltzz, helped Domino's become the fastest growing pizza company in Australia.
Despite ambitious growth plans from competitors such as Guzman Y Gomez, Mr Meij thinks the fast-food market is not yet saturated and could see another 300 stores opening across Australia and New Zealand.
"It's not only about growing the existing business - dinner, core, families and mates getting together - it's about growing up the new segments. You're going to see more products launched into lunch and snacking," he said.
Investors will be encouraged to see Domino's getting on top of their debts, with net debt down to $690 million from $770 million six months prior.
It also got its net leverage ratio down to 2.35 times, with a goal of cutting it further to two times, after increasing its debt covenant ratio to 3.5 times leverage.
Domino's delivered an unfranked final dividend of 50.4c.
