Latin American transaction leads to loss at McDonald's

by FoodBusinessNews.net Staff
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OAK BROOK, ILL. — A developmental license transaction in 18 countries in Latin America and the Caribbean contributed to a loss of $711,700,000 at McDonald’s Corp. in the second quarter June 30, which compared with net income of $834,100,000 during the same quarter of 2006.

Revenue in the quarter was $6,010,500,000, up 12% from $5,367,400,000 during the same quarter of the previous year.

"McDonald’s results reflect the financial impact of the previously announced developmental license transaction in Latin America," said Jim Skinner, chief executive officer. "This strategic transaction builds upon the fundamental strengths of our franchising business model, further solidifies our commitment to continue enhancing shareholder value and paves the way to even stronger results."

The pre-tax and after-tax net expense of the transaction was $1.6 billion.

Other quarterly highlights include a global comparable sales increase of 7.4%, company-operated and franchised restaurant margins increasing for the sixth consecutive quarter and the repurchasing of $664 million of stock.

For the six months ended June 30, the company posted net income of $50,700,000, down 97% compared with net income of $1,459,400,000 during the same quarter of 2006. Revenue for the period was $11,474,600,000, a 12% increase compared with $10,281,300,000 during the same period in 2006.

"We continue to increase our relevance to busy consumers by delivering choice, variety and convenience that our customers have come to expect from McDonald’s," Mr. Skinner said. "We are driving operating results with enduring base-line business momentum. In the second quarter, we increased visit frequency and profitability with our best quarterly comparable sales result since 2004."

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