10-QPeriod: Q1 FY2011

MCDONALDS CORP Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:MCD

Summary

McDonald's Corporation reported strong performance for the first quarter ended March 31, 2011, with total revenues increasing by 9% to $6.11 billion and operating income up 9% to $1.83 billion. Diluted earnings per share (EPS) rose 15% to $1.15, demonstrating robust profit growth driven by global comparable sales increases of 4.2%. The company continued its strategic focus on enhancing the customer experience through menu optimization, restaurant modernization, and improved accessibility, which resonated well with consumers globally. The company also highlighted its commitment to shareholder returns through significant share repurchases totaling $1.4 billion and dividend payments of $635.1 million. Despite facing some challenges, including commodity and labor cost pressures and the impact of natural disasters in Japan, McDonald's maintained a strong financial position and demonstrated effective management of market risks through its hedging strategies. The outlook for the full year suggests continued growth, supported by new restaurant additions and ongoing reinvestment in existing locations.

Financial Highlights

46 data points
Beta

Revenue

$6.11B

Net Income

$1.21B

19.8% Net Margin

EPS (Diluted)

$1.15

Total Assets

$32.08B

Cash & Equivalents

$1.94B

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$6.11B
SG&A Expenses$563.60M
Operating Expenses$4.29B
Operating Income$1.83B
Interest Expense$120.10M
Net Income$1.21B
EPS (Basic)$1.16
EPS (Diluted)$1.15
Shares Outstanding (Basic)1.04B
Shares Outstanding (Diluted)1.05B

Key Highlights

  • 1Total revenues grew 9% year-over-year to $6.11 billion for the first quarter of 2011.
  • 2Diluted earnings per share (EPS) increased 15% to $1.15, indicating strong profitability.
  • 3Global comparable sales rose by a healthy 4.2%, showcasing broad-based consumer demand.
  • 4The company repurchased $1.4 billion of its stock and paid $635.1 million in dividends, returning capital to shareholders.
  • 5Operating income increased by 9% to $1.83 billion, reflecting effective cost management and revenue growth.
  • 6The APMEA segment showed significant revenue growth of 18% (10% in constant currency), driven by strong performance in China and Australia.
  • 7Company-operated margins in the U.S. experienced a slight decrease due to higher commodity and labor costs, despite positive comparable sales.

Frequently Asked Questions

McDonald's reported a strong first quarter ended March 31, 2011, with total revenues up 9% to $6.11 billion and net income increasing by 11% to $1.21 billion. Diluted earnings per share (EPS) saw a significant increase of 15%, reaching $1.15. This growth was underpinned by a 4.2% increase in global comparable sales and improved operating income, which rose 9% to $1.83 billion.

Comparable sales growth was driven by a combination of factors across different regions. In the U.S., beverages (including McCafé), new breakfast items, and promotional products contributed. Europe saw growth from everyday affordability, core menu items, and restaurant reimaging. In APMEA, limited-time offers, restaurant reimaging, and service initiatives were key drivers. Overall, the company's 'Plan to Win' strategy, focusing on People, Products, Place, Price, and Promotion, continues to resonate with consumers.

The company experienced some pressure on its company-operated restaurant margins in the U.S. due to higher commodity and labor costs. For the full year 2011, McDonald's expects the total basket of goods costs to increase by 4-4.5% in the U.S. and Europe. They are managing these pressures through menu pricing actions that aim to balance cost increases with maintaining guest count momentum and market share.

McDonald's is actively returning value to shareholders. In the first quarter of 2011, the company repurchased 18.4 million shares for $1.4 billion under its share repurchase program and declared dividends totaling $0.61 per share, amounting to $635.1 million. These actions demonstrate a commitment to enhancing shareholder returns.