McDonald's profits jump on better sales, China deal
24 Oct 2017 - 16:41
New York: McDonald's reported a jump in third-quarter profit Tuesday, boosted by better sales in key markets and a one-time infusion of funds from refranchising Chinese and Hong Kong restaurants.
Net income for the quarter ending September 30 was $1.9 billion, up 47.7 percent from the year-ago period. That included a gain of about $850 million from the sale of China and Hong Kong businesses to franchising companies.
Revenues fell 10.4 percent to $5.7 billion due to the divestments in Asia.
McDonald's reported that global comparable sales increased six percent and cited growth in several key markets, including the United States, China, Britain and Canada.
US sales were lifted by some aggressive discounting initiatives, including the McPick 2 value deal, which charged $5 for two meal-sized items, such as the Big Mac and Chicken McNuggets.
McDonald's said the refranchsing efforts in Asia were ahead of schedule, with some 4,000 restaurants spun off more than a year before the original plan.
The refranchising "brings us closer to the customers and communities we serve in these markets and creates a better opportunity to unlock their full growth potential," said chief financial officer Kevin Ozan.
"Our more heavily franchised structure will continue to drive shareholder value by providing a more stable revenue and income stream with higher returns on invested capital."
Shares of McDonald's rose 0.4 percent to $164 in pre-market trading.