Advertisement
Advertisement

Middle Eastern Turmoil Takes a Bite Out of McDonald’s Revenue

By:
James Hyerczyk
Updated: Feb 5, 2024, 15:21 UTC

McDonald's (MCD) surpasses EPS forecasts in Q4, despite falling short in global revenue projections due to Middle Eastern conflicts.

McDonald's Corporation

In this article:

Key Points

  • McDonald’s EPS Beats Expectations, Revenue Slightly Misses Mark
  • Middle Eastern Conflict Affects McDonald’s Global Sales Growth
  • U.S. Market Shows Strength, International Segments Face Hurdles

McDonald’s Quarterly Earnings: A Mixed Bag Amidst Middle Eastern Challenges

McDonald’s, the renowned fast-food giant, encountered mixed fortunes in its latest quarterly earnings. Released on Monday, the report detailed the impacts of Middle Eastern turmoil on its operations, resulting in a slight drop in premarket shares by over 1%.

Daily McDonald’s Corporation

Financial Performance

In a key highlight, McDonald’s outperformed Wall Street expectations in terms of earnings per share (EPS). The adjusted EPS stood at $2.95, surpassing the forecast of $2.82 by LSEG. However, the company’s revenue of $6.41 billion fell marginally short of the expected $6.45 billion.

Net Income and Sales Growth

The fourth-quarter results showed an uptick in net income, reaching $2.04 billion or $2.80 per share, a climb from the prior year’s $1.9 billion or $2.59 per share. Adjusting for various exclusions like software write-offs and restructuring costs, the EPS was recalculated to $2.95. Sales saw an 8% rise, totaling $6.41 billion.

Global Same-Store Sales

Global same-store sales grew by 3.4% in the quarter, a figure that did not meet the StreetAccount estimates of 4.7%. This underperformance was primarily due to the sales downturn in the Middle Eastern markets.

Segment-Wise Performance

International Developmental Licensed Markets: This segment, including the Middle East, showed a minimal increase in same-store sales of 0.7%. The ongoing conflict in the Middle East was a significant factor in this sluggish performance, although other regions like China and Japan experienced positive growth.

U.S. Market: The domestic market recorded a 4.3% rise in same-store sales, in line with expectations. This growth was fueled by menu price increases, effective marketing strategies, and a boost in digital sales.

International Operated Markets: Covering countries like Canada, Australia, and Germany, this segment reported a 4.4% growth in same-store sales, slightly below the 5.1% predicted by StreetAccount. France was a notable exception, with a decrease in same-store sales.

Conclusion

McDonald’s latest earnings report illustrates the company’s resilience in the face of global challenges, particularly in the Middle East. While surpassing EPS expectations, the company faced hurdles in revenue and global same-store sales. These results underscore McDonald’s ongoing efforts to adapt and thrive in a complex and ever-changing global market environment.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement