OAK BROOK, Ill., July 23, 2015 /PRNewswire/ -- McDonald's
Corporation today announced results for the second quarter ended
June 30, 2015.
Second quarter results included:
- Global comparable sales decrease of 0.7%, reflecting
negative guest traffic in all major segments
- Consolidated revenues decrease of 10% (increase of 1% in
constant currencies)
- Consolidated operating income decrease of 16% (6% in
constant currencies), due in part to approximately $45 million of restructuring charges incurred to
optimize the Company's global operating structure
- Diluted earnings per share of $1.26, a decrease of 10% (1% in constant
currencies)
- Returned $2.5 billion to
shareholders through share repurchases and dividends, bringing the
year-to-date return to shareholders to $3.9
billion in connection with our 3-year target to return
$18-20 billion to shareholders by the
end of 2016.
"We have made meaningful progress since announcing the initial
steps of McDonald's turnaround plan in early May," said McDonald's
President and Chief Executive Officer Steve
Easterbrook. "To position the business for long-term growth,
we've undergone significant organizational change and are
streamlining our global resources to improve our efficiency and
effectiveness. While our second quarter results were disappointing,
we are seeing early signs of momentum. Looking ahead to third
quarter, we expect positive global comparable sales led by growth
in our newly-created International Lead Market segment and
China's continuing recovery from
the 2014 APMEA supplier issue. I am confident that we will create
the transformation necessary for McDonald's to become a modern,
progressive burger company delivering a contemporary restaurant
experience."
In the U.S., second quarter comparable sales decreased 2.0%,
reflecting negative guest traffic as the featured products and
promotions did not achieve expected consumer response amid ongoing
competitive activity. Operating income for the quarter decreased
6%, reflecting the soft, top-line performance. Going forward, local
market tests around all-day breakfast and menu simplification will
continue as part of the work underway to enhance the experience for
over 25 million U.S. customers who visit McDonald's each day.
Europe's second quarter
comparable sales increased 1.2% driven by solid performance in the
U.K. and Germany, partly offset by
negative results in France.
Second quarter operating income decreased 20% (2% in constant
currencies) reflecting economic challenges in certain key markets
and strategic charges associated with the global business
turnaround plan.
In APMEA, second quarter comparable sales decreased 4.5%, and
operating income declined 26% (16% in constant currencies)
primarily due to the impact of prolonged, broad-based consumer
perception issues in Japan along
with negative performance in China
and other Asian markets, partly offset by strong performance in
Australia.
Kevin Ozan, McDonald's Chief
Financial Officer, noted, "Our turnaround will be led by
operational growth and supported by a comprehensive approach to
financial management. The structural changes we are implementing,
coupled with our plan to refranchise about 3,500 restaurants by the
end of 2018 and achieve approximately $300
million of net annual savings on selling, general and
administrative expenses by the end of 2017, are designed to
position us for future growth. We continue to evaluate additional
ideas to further drive shareholder value through actions that
deliver sustainable long-term growth."
Easterbrook concluded, "We begin third quarter under a new
structure supported by market-level focus, stronger accountability
and an unwavering emphasis on the basic fundamentals of running
great restaurants. We are aligning our initiatives and resources
behind longer-term strategic actions with the ability to drive
meaningful improvements in our business. We have talented
franchisees, suppliers and employees working together to create the
change needed to deliver a better experience for our
customers."
KEY HIGHLIGHTS -
CONSOLIDATED
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
2014
|
(Dec)
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
2015
|
2014
|
(Dec)
|
Inc/ (Dec)
Excluding
Currency
Translation
|
Revenues
|
$
|
6,497.7
|
$
|
7,181.7
|
(10)%
|
1%
|
|
$
|
12,456.6
|
$
|
13,882.0
|
(10)%
|
0%
|
Operating income
(1)
|
1,849.3
|
2,189.0
|
(16)
|
(6)
|
|
3,234.8
|
4,125.0
|
(22)
|
(13)
|
Net income
|
1,202.4
|
1,387.1
|
(13)
|
(4)
|
|
2,013.9
|
2,591.9
|
(22)
|
(14)
|
Earnings per
share-diluted (1), (2)
|
$
|
1.26
|
$
|
1.40
|
(10)%
|
(1)%
|
|
$
|
2.09
|
$
|
2.61
|
(20)%
|
(11)%
|
|
|
(1)
|
For the quarter and
six months, results were negatively impacted by approximately $45
million of restructuring charges incurred to optimize the Company's
global operating structure in connection with the Company's
turnaround plan announced in early May. The six months was also
negatively impacted by strategic charges of $195 million recognized
in the first quarter.
|
|
|
|
In constant
currencies and excluding the impact of the first and second quarter
strategic charges, earnings per share for the six months would have
decreased $0.08 or 3%.
|
|
|
(2)
|
Foreign currency
translation had a negative impact of $0.13 and $0.23 on diluted
earnings per share for the quarter and six months,
respectively.
|
|
|
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Comparable sales represent sales at
all restaurants and comparable guest counts represent the number of
transactions at all restaurants, whether operated by the Company or
by franchisees, in operation at least thirteen months including
those temporarily closed. Some of the reasons restaurants may be
temporarily closed include reimaging or remodeling, rebuilding,
road construction and natural disasters. Comparable sales exclude
the impact of currency translation. Comparable sales are driven by
changes in guest counts and average check, which is affected by
changes in pricing and product mix. Typically, pricing has a
greater impact on average check than product mix. Management
reviews the increase or decrease in comparable sales and comparable
guest counts compared with the same period in the prior year to
assess business trends. The number of weekdays and weekend days,
referred to as the calendar shift/trading day adjustment, can
impact comparable sales and guest counts. In addition, the timing
of holidays can impact comparable sales and guest counts.
Information in constant currency is calculated by translating
current year results at prior year average exchange rates.
Management reviews and analyzes business results excluding the
effect of foreign currency translation and bases incentive
compensation plans on these results because they believe this
better represents the Company's underlying business trends.
RELATED COMMUNICATIONS
This press release should be
read in conjunction with Exhibit 99.2 in the Company's Form 8-K
filing for supplemental information related to the Company's
results for the quarter ended June 30,
2015.
McDonald's Corporation will broadcast its investor conference
call live over the Internet at 10:00 a.m.
Central Time on July 23, 2015.
A link to the live webcast will be available at
www.investor.mcdonalds.com. There will also be an archived
webcast and podcast available for a limited time.
McDonald's tentatively plans to release third quarter results
before the market opens on October 22,
2015 and will host an investor webcast. This webcast will be
broadcast live and available for replay for a limited time
thereafter at www.investor.mcdonalds.com.
ABOUT McDONALD'S
McDonald's is the world's leading
global foodservice retailer with over 36,000 locations serving
approximately 69 million customers in over 100 countries each day.
More than 80% of McDonald's restaurants worldwide are owned and
operated by independent local business men and women.
FORWARD-LOOKING STATEMENTS
This release contains
certain forward-looking statements, which reflect management's
expectations regarding future events and operating performance and
speak only as of the date hereof. These forward-looking statements
involve a number of risks and uncertainties. The factors that could
cause actual results to differ materially from our expectations are
detailed in the Company's filings with the Securities and Exchange
Commission, such as its annual and quarterly reports and current
reports on Form 8-K.
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
June 30,
|
2015
|
2014
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,261.1
|
$
|
4,785.9
|
$
|
(524.8)
|
(11)%
|
Revenues from
franchised restaurants
|
2,236.6
|
2,395.8
|
(159.2)
|
(7)
|
|
|
|
|
|
TOTAL
REVENUES
|
6,497.7
|
7,181.7
|
(684.0)
|
(10)
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
Company-operated
restaurant expenses
|
3,596.3
|
3,969.8
|
(373.5)
|
(9)
|
Franchised
restaurants—occupancy expenses
|
411.0
|
427.6
|
(16.6)
|
(4)
|
Selling, general
& administrative expenses
|
592.4
|
629.2
|
(36.8)
|
(6)
|
Other operating
(income) expense, net
|
48.7
|
(33.9)
|
82.6
|
n/m
|
Total operating costs
and expenses
|
4,648.4
|
4,992.7
|
(344.3)
|
(7)
|
|
|
|
|
|
OPERATING
INCOME
|
1,849.3
|
2,189.0
|
(339.7)
|
(16)
|
|
|
|
|
|
Interest
expense
|
149.2
|
137.9
|
11.3
|
8
|
Nonoperating (income)
expense, net
|
(12.3)
|
(20.4)
|
8.1
|
40
|
|
|
|
|
|
Income before
provision for income taxes
|
1,712.4
|
2,071.5
|
(359.1)
|
(17)
|
Provision for income
taxes
|
510.0
|
684.4
|
(174.4)
|
(25)
|
|
|
|
|
|
NET INCOME
|
$
|
1,202.4
|
$
|
1,387.1
|
$
|
(184.7)
|
(13)%
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.26
|
$
|
1.40
|
$
|
(0.14)
|
(10)%
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
957.6
|
993.2
|
(35.6)
|
(4)%
|
n/m Not
meaningful
|
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
Six Months Ended
June 30,
|
2015
|
2014
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
8,175.2
|
$
|
9,276.4
|
$
|
(1,101.2)
|
(12)%
|
Revenues from
franchised restaurants
|
4,281.4
|
4,605.6
|
(324.2)
|
(7)
|
|
|
|
|
|
TOTAL
REVENUES
|
12,456.6
|
13,882.0
|
(1,425.4)
|
(10)
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
Company-operated
restaurant expenses
|
6,950.6
|
7,736.9
|
(786.3)
|
(10)
|
Franchised
restaurants—occupancy expenses
|
814.6
|
844.7
|
(30.1)
|
(4)
|
Selling, general
& administrative expenses
|
1,175.2
|
1,249.6
|
(74.4)
|
(6)
|
Other operating
(income) expense, net
|
281.4
|
(74.2)
|
355.6
|
n/m
|
Total operating costs
and expenses
|
9,221.8
|
9,757.0
|
(535.2)
|
(5)
|
|
|
|
|
|
OPERATING
INCOME
|
3,234.8
|
4,125.0
|
(890.2)
|
(22)
|
|
|
|
|
|
Interest
expense
|
296.5
|
273.4
|
23.1
|
8
|
Nonoperating (income)
expense, net
|
(28.2)
|
(3.2)
|
(25.0)
|
n/m
|
|
|
|
|
|
Income before
provision for income taxes
|
2,966.5
|
3,854.8
|
(888.3)
|
(23)
|
Provision for income
taxes
|
952.6
|
1,262.9
|
(310.3)
|
(25)
|
|
|
|
|
|
NET INCOME
|
$
|
2,013.9
|
$
|
2,591.9
|
$
|
(578.0)
|
(22)%
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.09
|
$
|
2.61
|
$
|
(0.52)
|
(20)%
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
961.7
|
994.6
|
(32.9)
|
(3)%
|
n/m Not
meaningful
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-reports-second-quarter-2015-results-300117392.html
SOURCE McDonald's Corporation