McDonald's gives analysts something to chew on after reporting stronger-than-expected quarterly earnings

Courtney Goldsmith
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McDonald's surprised analysts in its latest quarterly earnings
McDonald's surprised analysts in its latest quarterly earnings (Source: Getty)

The world's largest burger chain reported its fourth-quarter earnings were better than analysts expected as US restaurant sales beat forecasts.

The figures

Global sales rose 2.7 per cent in the three months to 31 December and 3.8 per cent for the full year, which was the company's strongest annual global comparable sales growth since 2011.

Total revenue fell for the tenth straight quarter, dropping five per cent to $6.03bn (£4.83bn), while operating income rose five per cent to $1.97bn.

Comparable sales at US restaurants fell 1.3 per cent in the period due to a comparatively strong quarter the year before after the launch of the All Day Breakfast.

International restaurant sales increased 2.8 per cent for the quarter as the UK led a strong performance.

Why it's interesting

Watford's own Steve Easterbrook took the helm of the burger slinging giant in early 2015, and he began the implementation of a company turnaround plan that is still in the works. Facets of the plan include selling restaurants to franchisees, streamlining the menu and delivering an "enhanced McDonald's experience" for customers around the world.

In December, the company said it would move its tax base from Luxembourg to the UK after facing scrutiny from EU regulators.

Read more: We're not clowning round with royalties says McDonald's

Analysts predicted a slightly higher drop of 1.4 per cent in US sales, according to research firm Consensus Metrix. And although revenue fell, Thomson Reuters analysts bet on an average of $5.99bn compared to McDonald's significantly higher results.

What McDonald's said

McDonald's president and chief executive Steve Easterbrook said

I'm confident that we are well-positioned to transition to a longer-term focus in 2017. Our refranchising efforts and financial discipline will enable us to direct our capital and G&A [general and administrative expense] resources towards new strategic opportunities to deliver on our long-term strategy.

We look forward to providing further details on our strategy and financial targets later this quarter. As we begin the first quarter of 2017, we are mindful of the comparison we face against first quarter 2016 results, which benefited from leap year, favourable weather and continued momentum from All-Day Breakfast in the US.

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