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McDonald's Q1 profits fall $400M, faster than 2014 declines

McDonald's Corporation reported Q1 results for the period ended March 31, 2015.

April 22, 2015

McDonald's Corporation reported Q1 results for the period ended March 31, 2015.

First quarter results included: 

• Global comparable sales decrease of 2.3 percent, reflecting negative guest traffic in all major segments
• Consolidated revenues decrease of 11 percent (1 percent in constant currencies)
• Consolidated operating income decrease of 28 percent (20 percent in constant currencies) due to weaker operating performance and $195 million of strategic charges related to restaurant closings and other management actions
• Diluted earnings per share of $0.84, a decrease of 31 percent (23 percent in constant currencies), which includes strategic charges totaling $0.17 per share and a negative foreign currency translation impact of $0.09 per share. In constant currencies and excluding the strategic charges, earnings per share decreased $0.11 or 9 percent
• Return of $1.4 billion to shareholders through dividends and share repurchases

"As the world's leading restaurant company, we are evolving to be more responsive to today's customer," said McDonald's President and Chief Executive Officer Steve Easterbrook in a statement. "McDonald's management team is keenly focused on acting more quickly to better address today's consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth. We look forward to sharing the initial details of this plan on May 4, 2015."

According to CNN Money, Q1 profits fell by nearly a third, or $400 million, a faster decline in profits than all of last year.

U.S. first quarter comparable sales decreased 2.6 percent, reflecting negative sales and guest traffic as product and promotional offers did not overcome the competitive activity. U.S. operating income for Q1 declined 11 percent, attributed to weak sales results and the impact of restructuring and restaurant closing charges.

Europe's first quarter comparable sales declined 0.6 percent, offsetting positive performance in the U.K. due to weak results in France and Russia. First quarter operating income decreased 20 percent (4 percent in constant currencies) reflecting soft consumer sentiment and currency and inflation pressures in Russia, as well as ongoing macro-economic headwinds across much of Europe, the company said.

APMEA's first quarter comparable sales decreased 8.3 percent, which the company attributes primarily to the impact of prolonged, broad-based consumer perception issues in Japan, along with negative but improving performance in China. Operating income declined 80 percent (77 percent in constant currencies) due to closings and other charges and negative operating performance in Japan and China, McDonald's reported in a press release.