By Luciana Magalhaes
SÃO PAULO--Arcos Dorados, the world's largest McDonald's
franchisee, plans to focus its 2014 expansion efforts in Brazil and
hopes the country will benefit from the monthlong World Cup soccer
tournament that starts in June.
McDonald's is one of the sponsors of the World Cup.
Arcos plans to open 90 new restaurants across the region in 2014
and many of them will be in Brazil, said Woods Staton, chairman and
chief executive officer at Arcos Dorados in an interview, while
declining to give specific numbers.
On Tuesday, Arcos Dorados reported that its full-year net income
fell to $53.9 million in 2013 from $114.3 million in 2012, mostly
reflecting foreign currency exchange losses, mainly in Brazil,
Venezuela and Argentina.
Arcos Dorados went public in 2011 amid a wave of optimism about
Latin America--which accounts for about three-quarters of the
company's revenue,--driven by investor hopes to profit from the
growing middle class across the region.
In the past few years, though, Arcos Dorados has been dealing
with weak growth in Brazil, its biggest market, and other economic
problems in neighboring countries, including high inflation in
Venezuela, where McDonalds reportedly had to cut prices on some
products.
Arcos Dorados admits prices in Venezuela were "adjusted" in
January when annual inflation was at 56%. Despite social unrest in
Venezuela, Mr. Staton said he's "cautiously optimistic" about the
country's prospects and hopes changes in the local currency market
may bring more transparency to the Venezuelan bolívar.
Investors' concerns are reflected in the price of Arcos Dorados
shares, down 28.44% in the last 12 months, and trading below $10.00
on Tuesday.
Arcos Dorados saw its revenue in Brazil decline by 1.1% in the
fourth quarter because of the depreciation of the Brazilian
real.
The company, however, is still optimistic about the medium- and
longer-term prospects of the country and the rest of the region,
and says Brazil has a lot to gain from hosting some of the world's
most important sporting events.
Write to Luciana Magalhaes at luciana.magalhaes@wsj.com
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