Food Business News - February 10, 2015 - (Page 19)

More tough times ahead for McDonald's Don Thompson is stepping down as the fast-food chain's earnings fell 15% in 2014 and 21% for the fourth quarter OAK BROOK, ILL. - Using words like "challenging" and "difficult" to describe 2014, executives of McDonald's Corp. remain wary of the year ahead. The fast-food company ended the fiscal year with a 1% decrease in global comparable sales, as traffic fell in all major markets. And the challenges continue. "Looking to January, comparable sales are expected to be negative due in part to the shift in Chinese New Year and consumer perception issues in Japan," said Don Thompson, president and chief executive officer, during a Jan. 23 call with financial analysts. A few days after the company issued its financial results, it announced that Mr. Thompson will be retiring on March 1 and stepping down from his roles as c.e.o. and as a member of McDonald's board of directors. Steve Easterbrook has been named to replace Mr. Thompson as president and c.e.o. as well as become a member of the board of directors. "Steve is a strong and experienced executive who successfully led our U.K. and European business units, and the board is confident that he can effectively lead the company to improved financial and operational performance," said Andrew McKenna, non-executive chairman of the board of directors. Prior to the promotion, Mr. Easterbrook was senior executive vice-president and chief brand officer, leading McDonald's efforts to improve its marketing, advance menu innovation and create an infrastructure for its digital initiatives. He previously served in leadership roles across the company's global business, including president of McDonald's Europe. Net income for the fiscal year ended Dec. 31, 2014, was $4,757.8 million, equal to $4.82 per share, down 15% from $5,585.9 million, or $5.55 per share, for the year before. Revenues for the year dropped 2% to $27,441.3 million from revenues of $28,105.7 million in fiscal 2013. Several factors are to blame for the disappointing results, and not all headwinds were anticipated. In addition to ongoing macroeconomic challenges in the United States, McDonald's encountered a volatile operating environment in Russia and Ukraine and supplier issues in Asia-Pacific, Middle East and Africa markets during the year. "In response to these shortfalls we took a number of important steps to lay the foundation for our turnaround," Mr. Thompson said during the Jan. 23 conference call. "We are acting with a sense of urgency as these steps are critical to addressing current performance and to advancing our longer-term strategies." Bracing for continued problems, company February 10, 2015 serves International Food Products Dairies We troubleshoot dairy process issues, develop custom blends, enhance formulas, give buying advice and deliver the highest quality ingredients. Chocolate Dairy Powder Steve Easterbrook Milk Flavors Non-Dairies executives announced plans to pare back on several investments, including new store openings. Meanwhile, McDonald's is aiming to create a more relevant experience by rolling out a customizable burger platform and digital ordering. Last year, the company launched transparency and sustainability initiatives to improve consumer perceptions of the brand. Menu rationalization, "disruptive" value and new product innovation are on the way in the months ahead. "2015 will be a year of regaining momentum globally," Mr. Thompson said. "We expect further growth amid the pockets of success we are already seeing. "However, it will take time, especially in our larger markets, for customers to notice the comprehensive changes that are under way." Fourth-quarter income fell 21% to $1,097.5 million, equal to $1.13 per share, from $1,397 million, or $1.40 per share, in the prior-year period. Revenues for the quarter declined 7% to $6,572.2 million from $7,093.2 million in the comparable period. In the United States, fourth-quarter comparable sales fell 1.7% and operating income declined 15% on lower traffic in restaurants and expenses related to repositioning the business. "Throughout 2014 our results reflect the impact of ongoing broad-based challenges, including operating in an increasingly competitive marketplace amid sluggish industry growth," said Pete Bensen, senior executive vice-president and chief financial officer. "We expect to incur additional U.S. restructuring costs in the first quarter." Europe's fourth-quarter comparable sales Food Grade Chemicals Stabilizers Vitamins Cocoa Sugar 800-227-8427 Trusted Ingredients. Trusted Advisors. FOODBUSINESS NEWS ® 19

Table of Contents for the Digital Edition of Food Business News - February 10, 2015

Food Business News - February 10, 2015
Hershey continues move into snack categories
Renewed school food fight looming on the horizon
Beverage Business News - Colorful ways to quench a thirst
Table of Contents
Web Contents
Editorial - Oil and currency moves should be seen as threats
McCormick eyes ambitious growth in year ahead
Dunkin’ to debut cold blended beverage platform
Campbell Soup in the midst of reorganizing
The future of shopper marketing
JBS USA plans expansion at Utah beef plant
Large MOM multiples
More tough times ahead for McDonald’s
Inside Wendy’s menu strategy
Chipotle on fire
Diamond acquires stake in potato chip maker
Market Insight - More cattle but beef prices still rising
Health and Wellness - On the cutting edge of digestive health
Ingredient Innovations - Backing up satiety benefits
Company Profile - Tyson Foods flying high
New Food Products
Ingredient Market Trends - Soybean oil market pulled lower, then higher
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - February 10, 2015