McDonald’s sees profits slip as services limited amid Covid-19 crisis
The fast food chain reported a major slide in quarterly profit on Thursday due to most of its restaurants limiting their services to comply with government imposed lockdowns aimed at stopping the spread of Covid-19.
McDonald's recorded a 16.7% decline in first quarter (Q1) profit on Thursday, with the company blaming its dip in performance on the fact its restaurants have limited services to take-aways only in order to comply with government imposed lockdowns aimed at halting the spread of Covid-19.
The world’s largest fast food chain told investors that three quarters of its 39,000 restaurants around the globe were operational, with almost all of its 14,000 locations in the US still up and running.
‘The global crisis caused by the COVID-19 pandemic has significantly disrupted our business, and we continue to operate in a very challenging and unpredictable environment,’ McDonald’s CEO Chris Kempczinski said.
McDonald’s Q1 results: key figures
Earlier in April, the fast food company withdrew its outlook for 2020 due to uncertainties surrounding the economic impact of the Covid-19 crisis.
McDonald’s had pre-warned investors that it expected a 3.4% decline in Q1 comparable store sales, with net income forecast to fall to $1.11 billion, or $1.47 per share – down from $1.33 billion, or $1.72 per share recorded this time last year.
However, the company’s Q1 revenue managed to beat analysts’ expectations, falling 6.2% to $4.71 billion – exceeding Wall Street’s estimate of $4.65 billion, according to IBES data from Refinitiv.
McDonald’s shares stable despite disappointing Q1 earnings
Despite the disappointing set of Q1 results, the company’s share price remained stable, with the stock closing 1% higher on Wednesday, with marginal gains continuing in pre-market trading on Thursday.
McDonald’s closed at $187.82 a share on Wednesday.
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There are three ways to ‘buy’ US shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to $12,750 of Tesla stock, which is equivalent to 17 shares (quoted at $750 a share, at a GBP/USD rate of 1.305).
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Cost to get exposure to Tesla stock
Spread betting | CFD trading | Share dealing | |
Action | Buy £0.13 per point | Buy 17 share CFDs | Buy 17 shares |
Capital required to open | £2000 | £2550 | £12,750 |
Total fees | £2.16 | £24.24 | £97.70 |
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Note: The above is accurate as of 10 March 2020, and amounts do not include overnight funding charges and taxes.
Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.
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