(Reuters) -The British franchisee of pizza chain Domino’s is expecting more cost inflation this year and has hedged itself against wheat prices which have soared in response to the conflict in Ukraine, it said on Tuesday.
Domino’s Pizza Group Plc, a franchisee of U.S.-based Domino’s Pizza Inc, sources its wheat from the UK and Germany, and is hedged against wheat price inflation for the majority of 2022, Chief Executive Dominic Paul said in an interview.
Russia and Ukraine account for 29% of the world’s wheat exports and their conflict has driven wheat prices to multi-year highs on supply concerns.
“We buy (wheat) in scale, which means we already have good, strong relationships with our key suppliers,” Paul said. “I think we are better able than most to mitigate some of those inflationary pressures.”
The chain was already hedged against wheat price inflation prior to the Ukraine conflict, and has continued that strategy, Paul said.
Domino’s Pizza also unveiled a 46 million-pound ($60 million) share buyback programme. It reported a 12.5% higher annual profit, helped by a marketing campaign that boosted post-lockdown sales.
The company’s media and TV ad campaign, targeting families and friends reuniting after coronavirus lockdowns, as well as England reaching the final of soccer’s European Championship in July, helped boost orders, Domino’s said.
The pizza company also said 2022 earnings should fall in line with current market expectations, adding that its first-quarter trading had “started well”.
Shares of Domino’s were down 2.6% at 340 pence by 0910 GMT.
Elsewhere, popular British baker and fast food chain Greggs said costs of raw materials, energy and staff wages were rising more significantly than it had expected, and that this would limit any material profit growth in 2022.
($1 = 0.7642 pounds)
(Reporting by Shanima A in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Ed Osmond)
