The company said that while revenues were up 1% year-on-year for the first quarter ended 31 March 2013, sales and operating income both declined 1%. Although blaming some of this performance on the comparison with the strong results recorded in 2012, which included an extra day due to a leap year, it admitted that it had also been hit by “the ongoing impact of global economic headwinds”.
The US saw comparable sales fall by 1.2%, with operating income down 3%. However, McDonald’s pointed out that it still managed to outperform its competitors and increase market share, with its value offering boosted by the introduction of its Dollar Menu.
Economic uncertainty in Europe also contributed to a sales drop of 1.1%, although operating income increased 1%. The company said the UK and Russia were the strongest performers in the region, with poor performance in Germany and France offsetting these gains.
The biggest sales drop was recorded in the Asia-Pacific, Middle East and Africa (APMEA) region, with first-quarter comparable sales down 3.3% year-on-year and operating income down 1%. The company said this was “primarily due to ongoing weakness in Japan and negative results in China”.
McDonald’s president and CEO Don Thompson told investors that although the results were “not unexpected”, they were still not satisfactory. He added that economic pressures were unlikely to ease in the near future, with new challenges emerging, such as the outbreak of bird flu in China.
“So as we begin the second quarter, April global comparable sales are expected to be slightly negative,” he said.
However, he added that he was confident that McDonald’s would be able to increase revenues and built market share in the long term.
“We know we cannot control the external environment in which we’re operating, but we can leverage our scale and strength to aggressively pursue opportunities within our three global growth priorities to optimise our menu, modernise the customer experience and broaden accessibility to brand McDonald’s around the world,” he said.
Executive vice-president and chief financial officer Peter J Bensen said that while the challenges of low consumer confidence and shrinking income would continue in 2013, McDonald’s had made “the appropriate adjustments” to fortify its performance in the short-term, and would continue to watch the situation closely as it moved through the year.
“I’m confident in the future of our great brand. McDonald’s has increasingly modern restaurants in outstanding locations around the world, as well as best-in-class franchisees and suppliers and dedicated company employees, all aligned to drive long-term, enduring profitable growth through our system and shareholders,” he said.