Chicago / IL. (mdc) McDonald’s Corporation announced results for the third quarter ended September 30, 2018. «In addition to achieving 13 consecutive quarters of positive global comparable sales, we have made substantial progress modernising restaurants around the world, enhancing hospitality and elevating the experience for the millions of customers we serve every day. We remain confident that our strategy will drive long-term, profitable growth», said President and Chief Executive Officer Steve Easterbrook.
Third Quarter Highlights
- Global comparable sales increased 4.2 percent, reflecting positive comparable sales in all segments
- Due to the impact of the Company’s strategic refranchising initiative, consolidated revenues decreased 7 percent (5 percent in constant currencies)
- Systemwide sales increased 5 percent in constant currencies
- Consolidated operating income decreased 21 percent (20 percent in constant currencies), as a result of the comparison to a gain of approximately USD 850 million on the sale of the Company’s businesses in China and Hong Kong in the prior year. Excluding the impact of the gain, as well as prior year restructuring and impairment charges, consolidated operating income increased 2 percent (4 percent in constant currencies)
- Diluted earnings per share of USD 2.10 decreased 9 percent (7 percent in constant currencies). Excluding the impact of the prior year gain and restructuring and impairment charges, which totaled USD 0.56 per share, diluted earnings per share increased 19 percent (22 percent in constant currencies)
- Returned USD 1.7 billion to shareholders through share repurchases and dividends. In addition, the Company announced a 15 percent increase in its quarterly dividend to USD 1.16 per share beginning in the fourth quarter, and increased the cash return to shareholder target for the 3-year period ending 2019 to about USD 25 billion
In the U.S., third quarter comparable sales increased 2.4 percent, driven by growth in average check resulting from both product mix shifts and menu price increases. Operating income for the quarter increased 3 percent, as higher franchised margin Dollars and G+A savings were partly offset by lower Company-operated margin Dollars.
In the International Lead segment, third quarter comparable sales increased 5.4 percent, reflecting positive results across all markets, primarily driven by the U.K., Australia and France. The segment’s operating income was flat (increased 3 percent in constant currencies), as sales-driven improvements in franchised margin Dollars were mostly offset by the comparison to a prior year gain on the strategic sale of property in Australia.
In the High Growth segment, third quarter comparable sales increased 4.6 percent, led by strong performance in Italy and the Netherlands, and positive results across most of the segment. The segment’s prior year operating income included a gain of approximately USD 850 million related to the sale of the Company’s businesses in China and Hong Kong, partly offset by unrelated impairment charges. Excluding these items, the segment’s operating income decreased 5 percent (1 percent in constant currencies) due to the impact of refranchising.
In the Foundational markets, third quarter comparable sales increased 6.0 percent, reflecting positive sales performance in Japan and across all geographic regions. The segment’s operating income increased 6 percent (12 percent in constant currencies), fuelled by sales-driven improvements in franchised margin Dollars.
Steve Easterbrook concluded, «We are intensely focused on providing our customers with great experiences at McDonald’s by running great restaurants and executing our delivery, digital, and Experience of the Future initiatives at a high level».
Key Highlights – Consolidated
| USD in millions except per share data | Q3/2018 | Q3/2017 | Change | …in Constant Currencies | 9M-2018 | 9M-2017 | Change | …in Constant Currencies | ||||
| Revenues | USD | 5,369.4 | USD | 5,754.6 | (7)% | (5)% | USD | 15,862.2 | USD | 17,480.2 | (9)% | (11)% |
| Operating income | 2,417.7 | 3,079.4 | (21) | (20) | 6,823.1 | 7,408.5 | (8) | (10) | ||||
| Net income | 1,637.3 | 1,883.7 | (13) | (11) | 4,509.0 | 4,493.6 | 0 | (1) | ||||
| Earnings per share-diluted | USD | 2.10 | USD | 2.32 | (9)% | (7)% | USD | 5.72 | USD | 5.48 | 4% | 3% |
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Results for the quarter and nine months 2017 reflected a pre-tax gain of approximately USD 850 million on the sale of the Company’s businesses in China and Hong Kong, partly offset by USD 111 million of unrelated impairment charges, for a net benefit of USD 0.56 and USD 0.52 per share, respectively. Results for the nine months 2018 included pre-tax strategic restructuring charges of USD 94 million, or USD 0.09 per share (of which USD 85 million relates to the restructuring of the U.S. business).
Excluding the above items, net income for the quarter increased 14 percent (17 percent in constant currencies) and diluted earnings per share increased 19 percent (22 percent in constant currencies), and for the nine months net income increased 13 percent (11 percent in constant currencies) and diluted earnings per share increased 17 percent (15 percent in constant currencies). Results for the quarter and nine months reflected an increase in sales-driven franchised margin Dollars and a lower effective tax rate, partly offset by lower Company-operated margin Dollars due to the impact of re-franchising.
Foreign currency translation had a negative impact of USD 0.05 on diluted earnings per share for the quarter and a positive impact of USD 0.09 for the nine months.
