McDonald's Sticks to Estimate Despite Weakened Local Economies

Strategic Insights -

McDonald's Corp., the world's largest fast-food chain, has reassured analysts that it remains on track to meet its third-quarter profit expectations. Despite the impact of weakened local economies, the Oak Brook-based company, which earns 60 percent of its profit overseas, has taken steps to minimize the effects of a strong dollar. By buying supplies and financing restaurants in local currencies, McDonald's is able to maintain its earnings outlook, which is expected to be 69 cents per share in the third quarter, up from 63 cents a year ago, according to a First Call Corp. analyst survey.

Key Takeaways:

  • McDonald's officials have maintained their third-quarter profit outlook, despite the impact of weakened local economies on some of its markets.
  • The company earns 60 percent of its profit overseas and has implemented strategies to mitigate the effects of a strong dollar, such as buying supplies and financing restaurants in local currencies.
  • McDonald's has not issued an earnings warning, in contrast to companies like Coca-Cola, Gillette, and Revlon.
  • The company's decision to stick to its estimate is seen as a move to avoid making significant changes to its operations or strategy.
  • McDonald's has a significant portion of its business in foreign markets, where currencies are fluctuating.

Statistics:

  • 60 percent: The proportion of McDonald's profit that comes from overseas markets.
  • 69 cents per share: The expected earnings for McDonald's in the third quarter.
  • 63 cents per share: The earnings for McDonald's in the third quarter of the previous year.
  • $600 million: The annual revenue of the combined entity of Ellison Machinery Co., The Robert E. Morris Co., and Hartwig Inc.

Sources:

  • Bloomberg News
  • First Call Corp.
  • McDonald's Corp.