McDonald’s Corp. Reveals 8% Increase In Q1 Profit 

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The FINANCIAL — McDonald’s Corporation on April 25 announced results for the first quarter ended March 31, 2017.

“Our efforts to build a better McDonald’s are yielding meaningful results with continued positive momentum and a strong start to 2017 that includes positive comparable sales across all segments, higher global guest counts and enhanced profitability,” said McDonald’s President and Chief Executive Officer Steve Easterbrook. “There’s a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers. We’re continuing to build a more personalized and enjoyable visit, which delights customers with the taste and quality of our food and offers the highest level of convenience, in order to gain traffic in an increasingly competitive industry and deliver profitable growth for our System and shareholders.”

First quarter highlights:

Global comparable sales increased 4.0%, reflecting positive comparable sales in all segments while up against an extra day in 2016 due to leap year

Consolidated revenues decreased 4% (3% in constant currencies), due to the impact of refranchising

Consolidated operating income increased 14% (16% in constant currencies)

Diluted earnings per share of $1.47 increased 18% (19% in constant currencies)

Returned $1.6 billion to shareholders through share repurchases and dividends, in connection with our target to return between $22 and $24 billion to shareholders for the three-year period ending 2019

In the U.S., first quarter comparable sales increased 1.7%, building upon strong prior year results that benefited from the launch of All Day Breakfast. The U.S. continues to strengthen its foundation as it executes strategic menu, value and convenience initiatives, with first quarter performance benefiting from the expansion of All Day Breakfast offerings, along with the Big Mac and beverage value promotions. Operating income for the quarter increased 13%, reflecting savings from the Company’s recent G&A and refranchising initiatives, a gain from the strategic sale of a restaurant property and higher franchised margin dollars. The U.S. continues to focus its efforts on driving guest count growth, according to McDonald’s.

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Comparable sales for the International Lead segment increased 2.8% for the quarter, primarily driven by continued momentum in the U.K. and Canada’s successful launch of All Day Breakfast. The segment’s operating income increased 2% (6% in constant currencies), fueled by sales-driven improvements in franchised margin dollars across most markets.

In the High Growth segment, first quarter comparable sales increased 3.8%, led by strong performance in China and positive results across the entire segment. The segment’s operating income rose 36% (38% in constant currencies), with about half of the increase resulting from lower depreciation expense due to the accounting treatment of the pending sale of the China and Hong Kong businesses. Results also benefited from prior year VAT reform in China.

In the Foundational Markets & Corporate segment, first quarter comparable sales rose 10.7% and operating income increased significantly, led by very strong performance in Japan as well as strong results across the segment’s other geographic regions.

Steve Easterbrook concluded, “Today, we’re harnessing the strong execution of our fundamental business drivers, a sharp focus on our customers, the benefits of right-sizing our organization and the contributions of the talented franchisees, suppliers and employees to seize the opportunities before us. We’re challenging ourselves to identify and pursue initiatives that can bring the biggest benefit to the most customers in the shortest possible time. I’m confident that we’re on the right path and well-positioned to unlock incremental growth and deliver against our Velocity Growth Plan for 2017 and beyond.”


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