McDonald's earnings down on foreign exchange rates
by Jeff Gelski
OAK BROOK, Ill. – Earnings slipped 3 percent and revenues were relatively flat for McDonald’s Corp. in the third quarter. The results reflected the impact of foreign currency translation, or the exchange rate.
Revenues of $7,152.4 million for the quarter ended Sept. 30 compared to $7,166.3 million in the previous year’s third quarter. Net income of $1,455 million, or $1.43 per diluted share, was down compared to $1,507.3 million, or $1.45 per diluted share, in the previous year’s third quarter. Excluding the exchange rate, revenues rose 4 percent and net income rose 1 percent.
“While our sales momentum and current financial results reflect today’s challenging conditions, we continue to see significant long-term opportunities to brand McDonald’s and remain confident in the underlying strength of our business model,” said Don Thompson, chief executive officer of Oak Brook-based McDonald’s, when third-quarter results were reported Oct. 19. “We have the right plans in place to drive long-term profitable growth along with the experience and alignment throughout the McDonald’s system to navigate the current environment.
“We expect the near-term top- and bottom-line growth to remain pressured as we focus on driving guest traffic and market share by leveraging our strategies and competitive advantages in response to the global economic, operating and competitive challenges. As we begin the fourth quarter, October’s global comparable sales are currently trending negative.”
McDonald’s US in the third quarter had a comparable sales increase of 1.2 percent, but operating income declined 1 percent. Also in the third quarter, Europe had a 1.8 percent gain in comparable sales growth and a 7 percent decrease in operating income. Asia/Pacific, Middle East and Africa in the third quarter had a 1.4 percent comparable sales increase and a 3 percent operating income increase.
In the first nine months of the fiscal year, McDonald’s overall had revenues of $20,614.9 million, up 2 percent from $20,183.3 million in the same time period of the previous year, and net income of $4,068.7 million, or $3.98 per share, which compared to $4,126.5 million, or $3.94 per share, in the same time period of the previous year.