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Investing.com — McDonald’s Corporation (NYSE:MCD) has reported a weaker-than-expected income margin in the fourth quarter, as the international fast food chain was negatively impacted by elevated input costs, as well as store closures linked to the conflict in Ukraine.
Despite an uptick in comparable U.S. store sales, revenues for the period dipped by 1% to $5.93 billion, which the Chicago-based company said reflected the impact of the weakening of several major currencies against the U.S. dollar. Sales in China also slipped because strict COVID-19 rules in the country had yet to be reversed during much of the quarter.
McDonald’s said it also faced headwinds from soaring inflation combined with charges related to the sale of its Russian operations and the temporary closure of locations in Ukraine, following the outbreak of the war.
As a result, operating margin for the three months ended on December 31 came in at 43.6%, below Bloomberg consensus estimates of 45.45%.
Looking ahead, McDonald’s predicted that operating margin would be 45% in 2023, missing analysts’ predictions of 46.5%. Chief executive officer Chris Kempczinski warned in a statement that he expects “short-term inflationary pressures” to continue in 2023, while recently elevated borrowing costs will push up interest expenses by between 10% to 12%.
But Kempczinski backed the group’s expansion plans, saying there is now a “greater emphasis” on opening up new restaurants. McDonald’s said it will contribute about half of its estimated $2.2B to $2.4B in annual capital expenditures to its goal of opening about 1,900 locations globally in 2023.
Shares in McDonadl’s dipped in pre-market U.S. trading on Tuesday.
