At a Glance:
- The financial hit estimated for Mcdonald’s is $50 million a month or around $450 million through the end of the year.
- Both Russia and Ukraine account for 3% of the consolidated operating income, which is around $64 million based on 2021 data.
- Mcdonald’s store might stay closed until 2023.
Wall Street analysts have dropped the forecasts for Mcdonald’s 2022 and 2023 profit. This report came after the Western companies decided to stop the operations in Russia. The decision affected the companies financially as the cost of Russia’s invasion of Ukraine grow.
Morgan Stanley expected the net profit from the fast-food company of $9.25 a share for this year and $10.62 for 2023. The reductions of 8% and 3%, respectively, from its previous view. The research firm Gordon Haskett had previously estimated the cut by 5% in 2022 to $9.75 a share and by 3% for 2023 to $10.66 a share.
There were no official comments by Mcdonald’s.
$50 million financial hits for McDonald’s
McDonald’s is among the first open in Moscow in the Post-Soviet Era. The American food chain has agreed to still pay for the leases and wages of its 62,000 employees in Russia, despite temporarily shutting down the operations.
The financial hit estimated for Mcdonald’s is $50 million a month or around $450 million through the end of the year. However, the analysts still have faith in McDonald’s shares as the company can hold up even in uncertain consumer environments.
Shut until 2023
McDonald’s owns 84% of restaurants in Russia and is among the biggest fast-food chain in the country. Other fast-food chain brands like Starbucks and Burger King are less exposed in Russia. KFC’s parent company Yum Brands is the second biggest fast-food chain in Russia. Both Russia and Ukraine account for 3% of the consolidated operating income, which is around $64 million based on 2021 data.
The forecasts have not changed for Mcdonald’s or Yum although, the analysts are concerned about the rise in fuel prices related to the war and the impact on consumer spending and restaurant margins.
Though the shutdown was temporary, Gordon Haskett has predicted that the Mcdonald’s store might stay closed until 2023.
