OAK BROOK, Ill., Jan. 23, 2017 /PRNewswire/ -- McDonald's
Corporation today announced results for
the fourth quarter and year ended December 31,
2016.
"Throughout 2016, we worked diligently to lay the groundwork for
our long-term future. We focused on driving changes in our menu,
restaurants and technology to deliver an enhanced McDonald's
experience for our customers around the world," said McDonald's
President and Chief Executive Officer Steve
Easterbrook. "We applied the necessary rigour and discipline
to strengthen the Company and our financial performance. Our
efforts yielded a more streamlined and focused organisation that
generated solid fourth quarter and full year results, including our
strongest annual global comparable sales growth since 2011 along
with record franchisee cash flows in many of our major markets. I
am confident that we're on the right path as we pursue our goal of
being recognised by our customers as the modern, progressive burger
company."
Fourth quarter highlights:
- Global comparable sales increased 2.7%, including positive
comparable sales in the International Lead, High Growth and
Foundational segments
- Consolidated revenues decreased 5% (3% in
constant currencies), due to the impact of refranchising
- Consolidated operating income
increased 5% (7% in constant currencies)
- Diluted earnings per share of $1.44 increased 10% (12% in
constant currencies)
Full year highlights:
- Global comparable sales increased 3.8%, including positive
comparable sales across all segments
- Consolidated revenues decreased 3% (flat in constant
currencies), due to the impact of refranchising
- Consolidated operating income
increased 8% (11% in constant currencies)
- Diluted earnings per share of $5.44 increased 13% (16% in
constant currencies)
- Returned $2.2 billion to
shareholders through share repurchases and dividends in the fourth
quarter and $14.2 billion for the
full year, marking the successful achievement of the Company's
targeted return of $30 billion for
the three-year period ending 2016. In addition, the Company
announced a 6% increase in its dividend beginning in the fourth
quarter.
Fourth quarter comparable sales declined 1.3% in the U.S.,
reflecting the challenging comparison against the prior year launch
of the very successful All-Day Breakfast. Operating income for the
quarter decreased 11%, as the U.S. lapped a prior year gain on the
strategic sale of a unique restaurant property. Entering 2017,
McDonald's U.S. will continue to focus on growing guest
traffic.
Comparable sales for the International Lead segment increased
2.8% for the quarter, reflecting strong comparable sales growth
across most of the segment, led by the U.K. Fourth quarter
operating income for the segment increased 1% (6% in constant
currencies), fueled by sales-driven improvements in franchised
margin dollars across most markets.
Fourth quarter comparable sales increased 4.7% in the High
Growth segment led by strong performance in China and positive results across the entire
segment. The segment's operating income rose 16% (18% in constant
currencies), driven primarily by improved restaurant profitability
in China, which benefited from
recent VAT reform.
Fourth quarter comparable sales rose 11.1% in the Foundational
markets led by very strong performance in Japan and certain markets in Latin America, as well as solid results across
the segment's remaining geographic regions. For the segment, which
includes Corporate SG&A and other costs, operating income
increased for the quarter. These results primarily reflect a gain
from the sale of McDonald's Singapore in connection with the Company's
refranchising initiatives, as well as improved performance in
Japan.
Steve Easterbrook concluded, "For
McDonald's, 2016 was a year of purposeful change as we focused on
the key elements of our turnaround plan - strengthening our
business to drive long-term sustainable growth by sharpening our
focus on our customers, right-sizing our structure and putting the
right talent in place to lead the Company into the future. I'm
confident that we are well-positioned to transition to a
longer-term focus in 2017. Our refranchising efforts and financial
discipline will enable us to direct our capital and G&A
resources towards new strategic opportunities to deliver on our
long-term strategy. We look forward to providing further details on
our strategy and financial targets later this quarter. As we begin
the first quarter of 2017, we are mindful of the comparison we face
against first quarter 2016 results, which benefited from
leap year, favourable weather and
continued momentum from All-Day Breakfast in the U.S."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended
December 31,
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
|
6,028.9
|
|
|
$
|
6,341.3
|
|
|
(5)%
|
|
|
(3)%
|
|
|
$
|
24,621.9
|
|
|
$
|
25,413.0
|
|
|
(3)%
|
|
|
0%
|
|
Operating
income
|
1,969.0
|
|
|
1,880.4
|
|
|
5
|
|
|
7
|
|
|
7,744.5
|
|
|
7,145.5
|
|
|
8
|
|
|
11
|
|
Net income
|
1,193.4
|
|
|
1,206.2
|
|
|
(1)
|
|
|
1
|
|
|
4,686.5
|
|
|
4,529.3
|
|
|
3
|
|
|
6
|
|
Earnings per
share-diluted
|
$
|
1.44
|
|
|
$
|
1.31
|
|
|
10%
|
|
|
12%
|
|
|
$
|
5.44
|
|
|
$
|
4.80
|
|
|
13%
|
|
|
16%
|
|
Results for the quarter and year benefited from stronger
operating performance, and the year also benefited from higher
gains on sales of restaurant businesses, mostly in the U.S.
Both periods were impacted by the Company's ongoing
refranchising and G&A initiatives:
- In 2016, the quarter included $16
million of net pre-tax strategic credits consisting of a
gain of $75 million from the sale of
McDonald's Singapore to a
developmental licensee, partly offset by restructuring charges,
while the year included net pre-tax impairment and restructuring
charges of $342 million.
- In 2015, the fourth quarter and year included net pre-tax
strategic charges of $74 million and
$307 million, respectively, primarily
consisting of impairment and restructuring charges.
In addition, fourth quarter 2015 included a gain of $135 million from the strategic sale of a unique
restaurant property in the U.S.
For the quarter and year 2016, the current and prior year net
strategic charges/credits did not have a significant impact on
diluted earnings per share growth rates.
Foreign currency translation had a negative impact
of $0.03 and $0.11 on diluted earnings per
share for the quarter and year, 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.
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 and year ended
December 31, 2016.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on January 23, 2017. A link to the live webcast will
be available at www.investor.mcdonalds.com. There will also be
an archived webcast available for a limited time thereafter.
McDonald's Corporation will broadcast its upcoming investor
meeting live over the Internet on March 1,
2017. Information on presentation times and the live webcast
will be available at www.investor.mcdonalds.com. There will
also be an archived webcast available for a limited time
thereafter.
McDonald's plans to release first quarter results before the
market opens on April 25, 2017 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 in over 100 countries. Approximately 85%
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,
including the risk factors discussed in Exhibit 99.2 in the
Company's Form 8-K filing on January 23,
2017. The Company undertakes no obligation to update such
forward-looking statements, except as may otherwise be required by
law.
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
December 31,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
3,652.8
|
|
|
$
|
4,030.2
|
|
|
$
|
(377.4)
|
|
|
(9)%
|
|
Revenues from
franchised restaurants
|
2,376.1
|
|
|
2,311.1
|
|
|
65.0
|
|
|
3
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,028.9
|
|
|
6,341.3
|
|
|
(312.4)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,035.9
|
|
|
3,418.6
|
|
|
(382.7)
|
|
|
(11)
|
|
Franchised
restaurants—occupancy expenses
|
434.8
|
|
|
416.2
|
|
|
18.6
|
|
|
4
|
|
Selling,
general & administrative expenses
|
627.5
|
|
|
675.1
|
|
|
(47.6)
|
|
|
(7)
|
|
Other operating
(income) expense, net
|
(38.3)
|
|
|
(49.0)
|
|
|
10.7
|
|
|
22
|
|
Total operating costs
and expenses
|
4,059.9
|
|
|
4,460.9
|
|
|
(401.0)
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
1,969.0
|
|
|
1,880.4
|
|
|
88.6
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
221.2
|
|
|
180.9
|
|
|
40.3
|
|
|
22
|
|
Nonoperating (income)
expense, net
|
12.9
|
|
|
(11.3)
|
|
|
24.2
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,734.9
|
|
|
1,710.8
|
|
|
24.1
|
|
|
1
|
|
Provision for income
taxes
|
541.5
|
|
|
504.6
|
|
|
36.9
|
|
|
7
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,193.4
|
|
|
$
|
1,206.2
|
|
|
$
|
(12.8)
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.44
|
|
|
$
|
1.31
|
|
|
$
|
0.13
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
829.7
|
|
|
919.9
|
|
|
(90.2)
|
|
|
(10)%
|
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Years Ended
December 31,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
15,295.0
|
|
|
$
|
16,488.3
|
|
|
$
|
(1,193.3)
|
|
|
(7)%
|
|
Revenues from
franchised restaurants
|
9,326.9
|
|
|
8,924.7
|
|
|
402.2
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
24,621.9
|
|
|
25,413.0
|
|
|
(791.1)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
12,698.8
|
|
|
13,976.9
|
|
|
(1,278.1)
|
|
|
(9)
|
|
Franchised
restaurants—occupancy expenses
|
1,718.4
|
|
|
1,646.9
|
|
|
71.5
|
|
|
4
|
|
Selling,
general & administrative expenses
|
2,384.5
|
|
|
2,434.3
|
|
|
(49.8)
|
|
|
(2)
|
|
Other operating
(income) expense, net
|
75.7
|
|
|
209.4
|
|
|
(133.7)
|
|
|
(64)
|
|
Total operating costs
and expenses
|
16,877.4
|
|
|
18,267.5
|
|
|
(1,390.1)
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
7,744.5
|
|
|
7,145.5
|
|
|
599.0
|
|
|
8
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
884.8
|
|
|
638.3
|
|
|
246.5
|
|
|
39
|
|
Nonoperating (income)
expense, net
|
(6.3)
|
|
|
(48.5)
|
|
|
42.2
|
|
|
87
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
6,866.0
|
|
|
6,555.7
|
|
|
310.3
|
|
|
5
|
|
Provision for income
taxes
|
2,179.5
|
|
|
2,026.4
|
|
|
153.1
|
|
|
8
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
4,686.5
|
|
|
$
|
4,529.3
|
|
|
$
|
157.2
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
5.44
|
|
|
$
|
4.80
|
|
|
$
|
0.64
|
|
|
13%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
861.2
|
|
|
944.6
|
|
|
(83.4)
|
|
|
(9)%
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-delivers-fourth-quarter-and-full-year-2016-results-300394392.html
SOURCE McDonald's Corporation