, Australia

Macca’s Australia sales 'partly offset' global revenue decline

Despite showing strong performance in Australia, McDonald's continue to lose guest traffic in all major segments.

Global comparable sales slipped down 0.7%, according to the company’s results for the second quarter ending on June 30.

"We have made meaningful progress since announcing the initial steps of McDonald's turnaround plan in early May," McDonald's President and Chief Executive Officer Steve Easterbrook, said.

"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."

Consolidated revenues decreased 10% (increase of 1% in constant currencies), while consolidated operating income fell 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 came to $1.26, a decrease of 10% (1% in constant currencies).

In the U.S., second quarter comparable sales dropped 2.0%, reflecting negative guest traffic while operating income for the quarter decreased 6%.

Europe's second quarter comparable sales grew 1.2% driven by solid performance in the U.K. and Germany, partly offset by negative results in France. However, second quarter operating income decreased 20% (2% in constant currencies).

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 said, "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."

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