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05 Feb, 2024 15:45 05 Feb, 2024 15:45

McDonald's Q4 sales miss forecasts due to Middle East crisis

mcdonalds sign shop takeaway burger restaurant
McDonaldsSharecast photo / Josh White

Shares in McDonald's slumped in New York on Monday after the fast-food giant missed analysts' forecasts with its fourth-quarter sales as geopolitical turmoil in the Middle East weighed on results.

Global consolidated revenues increased 10% over 2023 as a whole to $25.5bn, as comparable sales increased 9%, with diluted earnings per share surging 39% to $11.56.

However, results for the fourth quarter showed that growth had tailed off towards the end of the year, which the company blamed on the war in the Middle East. The chain had come under fire in recent months after offering discounts to Israeli soldiers, prompting boycotts across the wider region, while some stores had to temporarily close as a result of protests.

Fourth-quarter adjusted diluted earnings per share rose by just 14% to to $2.95, albeit ahead of the $2.82 expected by the market, but revenue growth of 8% to $6.41bn missed the consensus estimate of $6.45bn.

Comparable sales growth had slowed to just 3.4% in the final three months of the year. Fourth-quarter comparable sales increased by 4.3% in the US and by 4.4% in International Operated Markets, helped by the UK, Germany and Canada, but growth in International Developmental Licensed Markets (which includes the Middle East) rose by just 0.7%.

In the International Developmental Licensed Markets and Corporate divisions, the majority of McDonald's restaurants are under a developmental license or affiliate arrangement, whereby it receives a royalty based on a percentage of sales, or initial fees when a new restaurant opens or a licence is granted – though the company typically doesn't invest any capital in these franchises.

Commenting on the Middle East specifically, the statement said: "The company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue as long as the war continues."

Shares were down 3.5% at $286.79 by 1024 ET, trading at their lowest level in two months.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.

The value of investments can fall and you may get back less than you invested.