Domino's Pizza group today posted a 46% fall in first half profit, as growth in its core UK business was held back by higher losses and charges in its fledgling German arm.

The group said pre-tax profits for the six months to June 30 after exceptional items fell to £11.6m sterling from £21.5m the same time last year.

Exceptional items related to an £11.1m impairment charge on the German master franchise agreement and corporate store costs. However, profits before tax, excluding Germany and Switzerland, rose 10.3% to £25.7m.

The company said that its first half like-for-like sales in Ireland rose by 6.5% compared to an increase of 2.9% the same time last year. 

It said that the improvement was seen across all parts of the country, and not just in Dublin.

''The market has just seen its sixth month of positive like-for-like sales growth, leading to growing confidence that this market is now heading into clearer waters,'' the company said in its results statement.

Earlier this month the firm warned that losses at its two-year old German arm, which could eventually outgrow its core British business, would be as much as £6m this year - higher than anticipated due to increased training costs and a poor performance at some of its managed stores.

Domino's said today that those factors, together with recent legislation in some areas of Germany to impose a minimum wage that will require the firm to support stores for longer, meant the group would slow expansion and now look to breakeven in Germany in 2016 or 2017, as opposed to an earlier target of 2015.

Domino's, Britain's biggest pizza delivery firm with over 700 stores, has grown rapidly on the back of new products, promotions and online demand. The firm said first half UK like-for-like sales were up 6.4%, with group sales up 13.8% to £326.5m.

The company, which makes around 98% of its revenue in the UK and Ireland, also announced that its long-standing chief financial officer Lee Ginsberg is to retire in 2014.

The firm also said it was increasing its interim dividend by 7.6% to 7.10 pence per share.