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McDonald's Reports Fourth Quarter And Full Year 2017 Results And First Quarter 2018 Cash Dividend

McDonald's Reports Fourth Quarter And Full Year 2017 Results And First Quarter 2018 Cash Dividend


OAK BROOK, IL
Thursday, February 1st, 2018

The iconic golden arches are still standing strong, even more so after McDonald’s announced positive results for the fourth quarter and year ended December 31, 2017. And while it might seem like there isn’t a McDonald’s-less place left on earth, with sales and customer traffic on the up-and-up from 2017, the fast-food chain plans to keep the ball rolling and add over 1,000 stores in 2018.

Steve Easterbrook, President & Chief Executive Officer, McDonald's"2017 was a strong year for McDonald's as customers responded to the many ways we are making their experience more convenient and enjoyable," said President and Chief Executive Officer Steve Easterbrook in a press release. "We served more customers more often, achieved our best comparable sales performance in six years, gained share in markets around the world, and made tremendous progress with growth platforms such as delivery, mobile order and pay, and Experience of the Future."

In the U.S., fourth quarter comparable sales increased 4.5 percent, which the company attributed to the strong performance of core menu items featured under the McPick 2 platform, as well as strong consumer response to the new Buttermilk Crispy Tenders and delivery. Operating income for the quarter increased 4%, reflecting higher franchised margin dollars and G&A savings, partly offset by lower company-operated margin dollars.

Financial success in 2017 has caused McDonald's to look towards expansion in 2018Other fourth quarter highlights included:

  • Global comparable sales increased by 5.5%, reflecting positive guest counts in all segments
  • Due to the impact of the company's strategic refranchising initiative, consolidated revenues decreased 11% (15% in constant currencies)
  • Systemwide sales increased 8% in constant currencies
  • Consolidated operating income increased 9% (6% in constant currencies)
  • Diluted earnings per share of $0.87 decreased 40% (42% in constant currencies), reflecting a net tax cost associated with the Tax Cuts and Jobs Act of 2017 ("Tax Act"), which totaled $0.84 per share. Excluding the impact of the Tax Act, diluted earnings per share was $1.71, an increase of 19% (16% in constant currencies)

Along with the McPick 2 platform, McDonald’s also honed in on low-cost promotions, launched a $1, $2, and $3 menu, and began targeting customers in a different price-tier with items like premium coffee and kale and Sriracha burgers, as reported by AOL.

Other 2017 full year highlights included:

  • Global comparable sales increased 5.3%, reflecting positive guest counts in all segments
  • Due to the impact of the Company's strategic refranchising initiative, consolidated revenues decreased 7% (8% in constant currencies)
  • Systemwide sales increased 7% in constant currencies
  • Consolidated operating income increased 23% (23% in constant currencies), which benefited from a gain of approximately $850 million on the sale of the Company's businesses in China and Hong Kong. Excluding the impact of the gain, as well as current and prior year impairment and strategic charges, consolidated operating income increased 9% (9% in constant currencies)
  • Diluted earnings per share increased 17% (17% in constant currencies)
  • Returned $7.7 billion to shareholders through share repurchases and dividends. In addition, the Company announced a 7% increase in its quarterly dividend to $1.01 beginning in the fourth quarter, demonstrating management's continued confidence in the Company's performance

With this year-end success, McDonald is planning big expansion plans for 2018 in order to revamp existing locations and increase its global location-count.

Kevin Ozan, Chief Financial Officer, McDonald's"For 2018, we plan to invest about $2.4 billion of capital, the majority of which will be dedicated to reinvesting in our existing locations through accelerated deployment of Experience of the Future in the U.S.," said Chief Financial Officer Kevin Ozan. "Our development plans also include the opening of about 1,000 new McDonald's restaurants, 75% of which will be funded by our expanded network of developmental licensees and affiliates around the world. At the same time, we plan to continue making meaningful investments in technology to modernize the customer experience and redefine convenience. I'm confident that now is the opportune time to strategically invest in our business and our restaurants to drive profitable growth and become an even better McDonald's."

With convenience in demand more than ever, will McDonald’s aggressive growth strategy continue to yield success for the company? Deli Market News will continue to report with the latest.

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