Although sales increased by 9.7% in the second quarter, turnover fell by 3%, in particular due to store closures in Russia and Ukraine.
Fast food chain McDonald’s continues to attract customers despite price hikes for its products. Its profits, however, were dented by the closure of its stores in Russia and Ukraine and higher costs. Same-store sales, the benchmark in retail, rose 9.7% in the second quarter.
In the United States, its biggest market, they rose 3.7%, driven by price increases as well as promotional offers in restaurants and online. Sales also increased strongly in France, Germany, Brazil and Japan, but fell in China due to strict government-imposed containments in the face of the resurgence of Covid-19.
Turnover down 3%
Taking into account the closures of stores in Russia and Ukraine, as well as the effects of exchange rates, the turnover of the group however fell by 3% to 5.72 billion dollars. McDonald’s net profit fell 46% to $1.2 billion. But reported by share and excluding exceptional items, the benchmark on Wall Street, the profit reached 2.55 dollars, exceeding the 2.47 dollars expected by analysts.
“The company’s operating margins were negatively impacted by restaurant closures in Russia and Ukraine, as well as inflationary pressures on labor and raw materials“, emphasizes the group. In particular, the company is dealing with the rise in products such as chicken and beef in the United States and, in a tight labor market, has had to raise its wages a little.
McDonald’s also recorded a $1.2 billion charge related to the sale of its restaurants in Russia, announced in May following Moscow’s invasion of Ukraine. The multinational, which had already provisioned $500 million in its accounts for the first quarter of 2022 to settle a tax dispute in France, added $37 million to it in the second quarter. McDonald’s finally agreed in mid-June to pay a total of 1.25 billion euros in France to escape criminal prosecution for tax evasion between 2009 and 2020.
Read alsoTax fraud: McDonald’s pays 1.25 billion euros to avoid prosecution in France
On the positive side, the group also recorded in its accounts for the second quarter a gain of 271 million dollars for the sale of its subsidiary Dynamic Yield. The stock was trading around equilibrium in electronic trading prior to the opening of the New York Stock Exchange.
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