News

Leaner McDonald's delivers strongest global yearly sales growth since 2011

January 23, 2017

McDonald's reported this morning that its 2016 worldwide comparable sales growth is stronger than it has been in five years, along with record franchisee cash flows in numerous major markets.

"Throughout 2016, we worked diligently to lay the groundwork for our long-term future," McDonald's President and CEO Steve Easterbrook, said in a news release. "We focused on driving changes in our menu, restaurants and technology to deliver an enhanced McDonald's experience for our customers around the world."

Highlights of the company's financial results over the past year, ending Dec. 31, include: 

• Global comparable sales increased 3.8 percent, with positive comparable sales in all segments.
• Consolidated revenues decreased 3 percent (flat in constant currencies), due to re-franchising.
• Consolidated operating income increased 8 percent (11 percent in constant currencies).
• Diluted earnings per share of $5.44 increased 13 percent (16 percent in constant currencies)
• Returned $2.2 billion to shareholders in Q4 2016 in share repurchases and dividends and $14.2 billion for full year, achieving targeted return of $30 billion in three years. 
• Company announced a 6 percent dividend increase beginning Q4. 

"For McDonald's, 2016 was a year of purposeful change as we focused on the key elements of our turnaround plan - strengthening our business to drive long-term sustainable growth by sharpening our focus on our customers, right-sizing our structure and putting the right talent in place to lead the company into the future. I'm confident that we are well-positioned to transition to a longer-term focus in 2017."

— McDonald's CEO Steve Easterbrook

Specific Q4 results include: 

• Global comparable sales increased 2.7 percent, with positive comparable sales in international lead, high-growth and foundational segments. 
• Consolidated revenues decreased 5 percent (3 percent in constant currencies), due to re-franchising.
• Consolidated operating income increased 5 percent (7 percent in constant currencies).
• Diluted earnings per share of $1.44 increased 10 percent (12 percent in constant currencies).

"We applied the necessary rigor and discipline to strengthen the company and our financial performance, Easterbrook said. "Our efforts yielded a more streamlined and focused organization that generated solid fourth quarter and full year results, including our strongest annual global comparable sales growth since 2011 along with record franchisee cash flows in many of our major markets.

For McDonald's, 2016 was a year of purposeful change as it focused strengthening the business to drive long-term sustainable growth by sharpening its  focus on our customers, right-sizing the structure and putting the right talent in place to lead the company into the future, Easterbrook said.

"I'm confident that we are well-positioned to transition to a longer-term focus in 2017," he said.

Easterbrook said through re-franchising and financial discipline McDonald's will direct capital and G&A resources toward opportunities that help deliver on the company's long-term strategy, which he said would be further delineated later this quarter. 

"As we begin the first quarter of 2017, we are mindful of the comparison we face against first quarter 2016 results, which benefited from leap year, favorable weather and continued momentum from All-Day Breakfast in the U.S.," he said.

Results for the quarter and year benefited from stronger operating performance. Results for the year were helped by higher gains on sales of restaurant businesses, mostly in the U.S. Both periods were impacted by the company's ongoing refranchising and G&A initiatives:

• In 2016, the quarter included $16 million of net pre-tax strategic credits consisting of a gain of $75 million from the sale of McDonald's Singapore to a developmental licensee, partly offset by restructuring charges, while the year included net pre-tax impairment and restructuring charges of $342 million.
• In 2015, the fourth quarter and year included net pre-tax strategic charges of $74 million and $307 million, respectively, primarily consisting of impairment and restructuring charges.

In addition, fourth quarter 2015 included a gain of $135 million from the strategic sale of a unique restaurant property in the U.S. For the quarter and year 2016, the current and prior year net strategic charges/credits did not have a significant impact on diluted earnings per share growth rates. Foreign currency translation had a negative impact of $0.03 and $0.11 on diluted earnings per share for the quarter and year, respectively.

The company said its financials should be read along with exhibit 99.2 from its form 8-K filing for additional information about quarter and year results.