McDonald's Q4 Results Miss Estimates

(RTTNews) - Fast food giant McDonald's Corp. (MCD) reported Friday a profit for the fourth quarter that declined 21 percent from last year, reflecting operating income and sales decline across regions. Earnings per share and quarterly sales also missed analysts' expectations. Looking ahead, the company said it is on track to meet its three-year financial goals set last year.

The Oak Brook, Illinois-based hamburger chain posted net income of $1.10 billion or $1.13 per share for the fourth quarter, lower than $1.40 billion or $1.40 per share in the prior-year quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $1.22 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that earnings per share decreased 14 percent in constant currencies, and includes a negative impact of $0.09 per share due to the supplier issue in APMEA.

Total revenues for the quarter decreased 7 percent or 1 percent in constant currencies, to $6.57 billion from $7.09 billion in the same quarter last year, and missed seventeen Wall Street analysts' consensus estimate of $6.68 billion.

Sales of company-operated restaurants declined 9 percent from last year to $4.30 billion, and revenues of franchised restaurants were $2.28 billion, down 3 percent from a year ago.

For the fourth quarter, global comparable sales - a metric used to gauge performance of stores open for at least one year - decreased 0.9 percent, reflecting negative guest traffic across all major segments.

On a segmental basis, U.S. comparable sales declined 1.7 percent, and operating income was down 15 percent. The company noted that McDonald's U.S. business begins 2015 evolving to a more nimble, customer-led organization with a strategic roadmap focused on menu simplification and local customer tastes and preferences.

McDonald's Europe delivered comparable sales drop of 1.1 percent, and reported a 14 percent decline in operating income, hurt by weakness in France and Germany as well as consumer confidence issues particularly in Russia and Ukraine.

APMEA region reported a 4.8 percent decline in comparable sales, and a 44 percent drop in operating income, primarily due to ongoing supplier issue in China, Japan and certain other markets.

Consolidated operating income decreased 20 percent or 15 percent in constant currencies, to $1.75 billion, primarily due to weak operating performance in the U.S. and the impact of the supplier issue in APMEA.

"2014 was a challenging year for McDonald's around the world. Our results declined as unforeseen events and weak operating performance pressured results in each of our geographic segments," President and CEO Don Thompson said.

Looking ahead to fiscal 2015, the company said it remains on track to return $18-$20 billion to shareholders through a combination of dividends and share repurchases, refranchise at least 1,500 restaurants and reallocate resources to higher growth initiative. These were part of the three-year financial goals set last year from 2014 through 2016.

"As we begin 2015, we are taking decisive action to regain momentum in sales, guest counts and market share. This involves driving foundational improvements in our major markets and continuing our recovery efforts in markets affected by unusual events," Thompson added.

In Friday's regular trading session, MCD is currently trading at $90.85, down $0.04 or 0.05% on a volume of 0.42 million shares. In the past 52-week period, the stock has been trading in a range of $87.62 to $103.78.