On January 23, the fast food giant, McDonald’s Corporation (NYSE:MCD) released its earnings for 4Q 2012. Although analysts were expecting an EPS of $1.33, the company beat the estimates as it reported quarterly earnings of $1.4 billion ($1.38 per share). A detailed analysis on how the company performed in its latest quarter is given below;
In the U.S, comparable sales increased 0.3% for the quarter and 3.3% for the year. Operating profit went up 2% for the year, while it remained the same for the quarter.
In the U.S, the company performed slightly better than it did in 3Q 2012, thanks to the introduction of new cheddar, bacon, onion sandwich in October and McRib sandwich in December. Moreover, with the addition of new grilled onion cheddar burger on the one dollar menu, things looked much better. McDonald’s would soon be launching Fish McBites, new beef sandwiches, chicken entrees, and breakfast and beverage offers that have already received a great response in the test markets across the U.S. In 4Q 2012, the company spent a lot on its marketing and will continue to do so in 2013. Having said this, McDonald’s has further plans of expanding its peak hour performance in order to attract more customers in the U.S.
In Europe, comparable sales went down to 0.60% for the quarter and were up 2.4% for the year. Operating profits were up 7% for the quarter and 6% for the year. Moreover, the company grew its market share by 0.10% to 9.2%.
As more and more customers were affected by the recent debt crisis, the restaurant industry didn’t do that well. However, according to the company, it grew its market share in Europe to 0.1% to 9.2%. Introduction of new products and selling more premium deals to the customers were major catalysts in Europe. In France for instance, the new Casse Croute Sandwich and drink deal did really well and in Germany, the McDeal value bundle with two new choices did wonders. Same is the case with U.K, where McDonald’s premium foods like Bacon, Chicken, and Onion did great.
In Asia Pacific, Middle East, and Africa, comparable sales went down 1.7% for the quarter and were up 1.4% for the year. Operating profits went down 1% for the quarter whereas; it increased 3% for the year.
The core reason behind company’s weak performance in APMEA region was Japan’s slow recovery and China’s sluggish growth. In the case of China, McDonald’s sales decreased 0.9% for the quarter, but grew by 3.2% for the year. The recent chicken supply issue has been the major cause behind company’s low sales in 4Q 2012. McDonald’s new web ordering system is all set to attract more customers in 2013, plus it’s also expected to reduce a significant chunk of company’s operating costs. In Australia, the company did show some resilience, thanks to new smoothie flavors, lamb sandwiches, and wraps.