New York: McDonald’s on Tuesday (January 31) reported a sharp rise in fourth-quarter profit after higher sales in most markets.
The fast food giant posted comparable sales growth of 12.6% globally in the quarter ending December 31.
Major markets such as the United States, Japan and Germany all posted solid growth, with the exception of China, where Covid-19 restrictions continued to drag down sales.
“Overall, our system as a system is better positioned in terms of consumer resilience and value advantage,” CEO Chris Kempczynski said on a conference call with analysts. We are showing strength,” he said.
But he said the company must remain “wise” when it comes to passing on higher operating costs to consumers.
Profit for the quarter was USD 1.9 billion (MYR 8.1 billion), representing a 1% decline in revenue to USD 5.9 billion and a 16% increase from the same period last year.
In contrast to the US, where cost pressures on food and paper materials have eased somewhat, in Europe, where the company is still grappling with “peak” inflation, costs have risen sharply, according to chief financial officer Ian Frederick Borden. The pressure remains particularly severe.
He said U.S. prices will rise by about 10% during 2022.
To help its partners, especially in Europe, McDonald’s plans to provide between $100 million and $150 million in financial assistance to franchisees in 2023, Boden said.
Back in its home market, McDonald’s plans to open about 400 restaurants in 2023, its first addition in the US since 2014.
The new U.S. restaurant is a “sign of confidence” in the business, Kempczynski said, adding that U.S. business is being boosted by rising digital and delivery sales.
McDonald’s plans to open 1,900 new stores worldwide, including about 900 new spots in China.
McDonald’s shares fell 2% to $265.54 in afternoon trading.
McDonald’s has beaten analysts’ expectations, but Briefing.com said McDonald’s “cautious comments on macro-related pressures” likely dampened investor enthusiasm. – AFP
