News

McDonald’s reports positive 2010 numbers

January 23, 2011

McDonald’s Corp. had nothing but good news this morning in its fourth quarter 2010 and year-end earnings report. For Q4 '10, ended Dec. 31, global sales were up 5 percent.

Broken down regionally, U.S. units turned in a 4.4 percent increase; Europe was up 3.4 percent; and APMEA was up 5.5 percent. Earnings per share are $1.16, a 5 percent increase (6 percent in constant currencies).

The domestic success in the fourth quarter is attributed to an ongoing emphasis on driving customer traffic, menu innovation and value. The fourth quarter was highlighted by the McRib, the introduction of its caramel mocha to the McCafe lineup and the popular Monopoly promotion.

December’s sales were affected by inclement weather; however, not enough to dampen the overall quarter results.

In Europe, both sales and guest counts increased, led by France and Russia’s operating income growth of 2 percent each. Europe’s focus on upgrading customer experiences with in-store modernization, expanded drive-thru services and four-tier menu pricing contributed to the segment’s boost.

Asia/Pacific, Middle East and Africa (APMEA) delivered strong comparable sales, led by Japan, Australia and China, and a staggering operating income growth of 18 percent. Driving demand in this growth region was menu innovation, value initiatives and limited-time offers.

2010 in review

For 2010 overall, global comparable sales increased 5 percent, with positive sales across all geographic segments in each quarter. Consolidated revenues were up 6 percent, hitting a record-high $24 billion.

Also, McDonald’s combined operating margin increased 90 basis points to 31 percent, while the company’s consolidated operating income increased 9 percent. Broken down, the U.S. was up 7 percent; Europe was up 8 percent; and APMEA increased by 21 percent.

Earnings per share for the company rose 11 percent to $4.58. This allowed for a return of $5.1 billion to shareholders through share repurchases and dividends paid.

“During 2010, we continued our efforts toward becoming our customers' favorite place and way to eat and drink – and customers rewarded us by visiting our restaurants more often. As a result, we generated strong sales and delivered profitable market share growth, along with higher global revenues, operating income and earnings per share,” said Jim Skinner, McDonald’s CEO. "Our results reflect the power of our customer-centered initiatives, the fundamentals of our business model and the alignment between McDonald's franchisees, suppliers and employees.”

Skinner added that McDonald’s Plan to Win has positioned the company to continue turning in positive performances for 2011. Thus far, global comparable sales are expected to increase 4 percent to 5 percent for January.

Throughout the remainder of 2011, McDonald’s is planning on investing $2.5 billion of capital, about half of which will be dedicated to opening about 1,100 new units. The rest will be invested in existing locations for reimaging efforts and more.

For example, McDonald's announced last month that it plans to add 150 to 200 restaurants in China this year. It also plans on remodeling most of its stores in that country by 2013.

“McDonald's continues to operate from a position of strength. Our recurring cash flow and strong balance sheet allow us to invest appropriately in our business and return significant amounts of cash to our shareholders,” Skinner said. “I am confident that these strengths will endure and continue to deliver for our system and our shareholders over the long term.”