Food Business News - January 31, 2012 - 16

McDonald’s income up 11% in year
Value and menu relevance cited as key drivers

Ralcorp details prospective ﬁnancials for Post
ST. LOUIS — Ralcorp Holdings Inc. said it expects its Post Foods cereal business to generate EBITDA of between $205 million and $225 million in the 12 months following Post’s separation from Ralcorp, and to incur a total of $15 million to $20 million in one-time separation costs during the two years after Post is spun off, including about $12 million in the ﬁrst 12 months following the separation. In detailing its prospective ﬁnancial information for the future Post business, Ralcorp said the adjusted EBITDA ﬁgure includes projected net sales of between $940 million and $980 million, depreciation and amortization expense of between $60 million and $64 million, and “no signiﬁcant increases in cost of goods sold or decrease in gross proﬁts as a result of higher commodities prices.” Ralcorp also noted that the EBITDA total assumes Post will grow market share in line with management expectations and that trade spending will be allocated efﬁciently and yield a positive return on investment. In preliminary estimates for the ﬁrst quarter ended Dec. 31, 2011, Ralcorp said its Branded Cereal Products segment posted operating proﬁt of between $33 million and $37 million, with net sales of between $210 million to $220 million. The company said its results were impacted negatively by a reduction in trade spending toward the end of ﬁscal 2011. “In the opinion of Post’s management, Post’s portfolio of brands requires additional investment in the form of more sophisticated trade spending and consumer support to stabilize and grow market share, which Post’s management considers its top priority,” Ralcorp said. Separately, Ralcorp began its offering of $775 million aggregate principal amount of senior notes due 2022 for Post Holdings, Inc. FBN

OAK BROOK, ILL. — Increased revenue, samestore sales gains and strength across the globe contributed to an 11% increase in income for McDonald’s during 2011. For the year ended Dec. 31, 2011, the company had income of $5,503.1 million, equal to $5.27 per share on the common stock, which compared with $4,946.3 million, or $4.58 per share, during the previous year. Revenue for the year was $27,006 million, up 12% from $24,074.6 million during ﬁscal 2010. “System-wide sales increased 7% in constant currencies with total comparable sales up 5.6%, marking our eighth consecutive year of positive comp sales growth in every area of the world,” said Jim Skinner, chief executive ofﬁcer, during a conference call with ﬁnancial analysts on Jan. 24. “We closed the year on a high note with fourth-quarter comp sales up 7.5%, the highest quarter in over seven years, and December comp sales at 9.6%, reﬂecting positive momentum and a weather beneﬁt in Europe and the U.S. This momentum continues as we begin 2012 with global comparable sales for January expected to be up 5.5% to 6.5%.” Despite the positive news, Mr. Skinner said the company is facing several headwinds as it enters 2012. “The global economy remains challenging with a recovery that’s predicted to be slow and prolonged,” he said. “And our industry still faces signiﬁcant headwinds, including ﬂat to slow growth, low consumer conﬁdence and volatile commodity prices.” In the U.S., the company’s comp r sales increased 4.8% for the year and 7.1% for the quarter. S. “Our performance in the U.S. ue, was driven by a focus on our value, e,” menu relevance and convenience,” Mr. Skinner said.

He said the U.S. business unit built its sales by focusing on promotional food events and its core menu. The return of the McRib and the December promotion of the Big Mac were cited as two examples that helped increase sales. “In 2012, we will leverage our success with line extensions and new ﬂavors as well as promotional food events to build sales,” Mr. Skinner said. “In addition to the Cherry Berry Chiller, we will be rolling out Chicken McBites and will expand on last year’s successful launch of oatmeal with the addition of blueberry banana nut oatmeal.” Line extensions and limited time promotions also helped grow the company’s McCafe beverage line. Coffee units sold increased 20% compared to last year, according to the company. For the fourth quarter ended Dec. 31, the company had income of $1,376.6 million, or $1.33 per share, up 11% from $1,242.3 million, or $1.16 per share, during the same quarter of the previous year. Revenue for the quarter was $6,822.7 million, up 10% from $6,214.1 million during the same quarter of the previous year. “As we begin 2012, we are intensifying our efforts toward the global priorities th that represent our greatest opportunities under the Plan to Win — optimizing and evolving our menu, modernizing the customer experience and broadening accessibility to our brand,” Mr. Skinner said. “In 2012, we plan to invest about $2.9 billion of capital — roughly half dedicated to opening more than 1,300 new M McDonald’s restaurants and the o other half allocated to investing in o our existing locations, including the re reimaging of over 2,400 restaurants. I am conﬁdent that the investments we are making today will yield long-term val value for our shareholders.” FBN

FOODBUSINESS NEWS

January 31, 2012

Food Business News - January 31, 2012

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