McDonalds and other local stores remain closed due to COVID-19 in Times Square on April 13, 2020 in New York, New York.
Eduardo Munoz Getty Images
McDonald’s on Thursday reported better-than-expected revenue, fueled by rising US prices and strong international sales growth.
The company’s shares rose by more than 2% in pre-marketing trading.
Here’s what the company says compared to what Wall Street expected, based on a survey by analysts at Refinitiv:
- Earnings per share: $ 2.28 adjusted
- Revenue: $ 5.67 billion versus the expected $ 5.59 billion
The fast-food giant reported first-quarter net income of $ 1.1 billion, or $ 1.48 a share, up from $ 1.54 billion, or $ 2.05 a share, a year earlier.
The company spent $ 27 million on lease payments, employee salaries and supplier costs in Russia and Ukraine after shutting down operations in both countries due to the war. McDonald’s has announced an additional $ 100 million fee for inventory in its supply chain, which is likely to break down due to the temporary closure of its restaurants in Ukraine and Russia. Overall, these costs reduced his earnings by 13 cents per share.
The company also said it had reserved $ 500 million, or 67 cents a share, for a potential settlement related to an international tax issue, but did not share further details.
Excluding the cost of settling taxes, restaurants in Ukraine and Russia and other items, McDonald’s earned $ 2.28 per share.
Net sales rose 11% to $ 5.67 billion, exceeding expectations of $ 5.59 billion. Global sales in the same store rose 11.8% in the quarter, fueled by strong growth in markets such as France and the United Kingdom. Digital system sales topped $ 5 billion in the quarter.
In the United States, sales in the same store increased by 3.5%, exceeding StreetAccount estimates by 3.3%. The company credits price increases and marketing promotions for growth in its domestic market. A year ago, the fast food chain reported sales growth in the same store of 13.6% as it overcame weak demand from the early blockade of the pandemic.
McDonald’s international market segment, which includes France, the United Kingdom and Australia, reported sales growth in the same store of 20.4%. The company said the reduction in measures for Covid-19 increased sales during the quarter.
In the segment of the international licensed markets for the company’s development, sales in the same store increased by 14.7%, driven by strong demand in Japan and Brazil. However, in China, sales at the same store shrank in the quarter as the revival of Covid led to renewed blockades.
Read the full revenue statement here.
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