MCDONALD'S HOLDINGS COMPANY (JAPAN), LTD. (Translation)
Consolidated Financial Results for the Nine Months Ended September 30, 2022
November 14, 2022 | |
McDonald's Holdings Company (Japan), Ltd. | |
Company code number: | 2702 (URL https://www.mcd-holdings.co.jp/en/) |
Stock market: | Tokyo Securities Exchange, Standard |
Representative: | Tamotsu Hiiro |
Contact: | CEO and President, Representative Director |
Shuko Yoshida | |
McDonald's Company (Japan), Ltd. | |
Vice President, Chief Financial Officer | |
Schedule of dividends payment: | Phone: +81-3-6911-6000 |
－ | |
Schedule of quarterly securities report submission: | November 14, 2022 |
Preparation of supplementary materials for quarterly financial results: Yes
Quarterly results briefing: Yes
1. Consolidated operating results (From January 1, 2022 to September 30, 2022)
(1) Consolidated financial results
(In millions of yen, with fractional amounts discarded) (Negative figures are shown in parenthesis)
Net income | ||||||||||||||||||||
Net sales | Operating income | Ordinary income | attributable to owners | |||||||||||||||||
of parent | ||||||||||||||||||||
(Millions of yen) | % | (Millions of yen) | % | (Millions of yen) | % | (Millions of yen) | % | |||||||||||||
September 30, 2022 | 259,930 | 9.9 | 27,125 | (5.0) | 26,592 | (4.6) | 16,795 | (6.4) | ||||||||||||
September 30, 2021 | 236,551 | 10.8 | 28,547 | 12.6 | 27,866 | 10.2 | 17,937 | 11.4 | ||||||||||||
(Note) Comprehensive income: | ||||||||||||||||||||
Nine months ended September 30, 2022: 16,782 million yen <(6.4)%> | ||||||||||||||||||||
Nine months ended September 30, 2021: 17,923 million yen <11.4%> | ||||||||||||||||||||
Net income | Net income per share, | |||||||||||||||||||
per share | fully diluted | |||||||||||||||||||
(Yen) | (Yen) | |||||||||||||||||||
September 30, 2022 | 126.32 | － | ||||||||||||||||||
September 30, 2021 | 134.91 | － | ||||||||||||||||||
(2) Consolidated financial position | ||||||||||||||||||||
(In millions of yen, with fractional amounts discarded) | ||||||||||||||||||||
Total assets | Total net assets | Equity ratio | ||||||||||||||||||
(Millions of yen) | (Millions of yen) | % | ||||||||||||||||||
As of September 30, 2022 | 256,501 | 203,512 | 79.3 | |||||||||||||||||
As of December 31, 2021 | 260,113 | 194,222 | 74.7 | |||||||||||||||||
(Note) Owner's equity: As of September 30, 2022: 203,512 million yen. As of December 31, 2021: 194,222 million yen | ||||||||||||||||||||
2. Dividends | ||||||||||||||||||||
Dividends per share | ||||||||||||||||||||
End of 1st quarter | End of 2nd quarter | End of 3rd quarter | End of year | Total | ||||||||||||||||
(Yen) | (Yen) | (Yen) | (Yen) | (Yen) | ||||||||||||||||
December 31, 2021 | ― | 0.00 | ― | 39.00 | 39.00 | |||||||||||||||
December 31, 2022 | ― | 0.00 | ― | ― | ― | |||||||||||||||
December 31, 2022 | ― | ― | ― | 39.00 | 39.00 | |||||||||||||||
(Forecast) | ||||||||||||||||||||
(Note) Changes to the dividend forecast from the most recently announced figures: None |
3. Consolidated earnings forecasts for the year ending December 31, 2022 (From January 1, 2022 to December 31, 2022)
Net sales | Operating income | Ordinary income | Net income attributable | Net income per | |||||
to owners of parent | share | ||||||||
(Millions of yen) | % | (Millions of yen) | % | (Millions of yen) | % | (Millions of yen) | % | (Yen) | |
Annual | 350,000 | 10.2 | 33,500 | (3.0) | 32,500 | (3.3) | 20,000 | (16.5) | 150.42 |
(Note) Change | to the earnings forecast | from the most recently announced figures: Yes | |||||||
4. Others | |||||||||
(1) Changes in significant subsidiaries (Changes in scope of consolidation): None | |||||||||
Newly consolidated: | － | Excluded: | － |
- Application of accounting procedures specific to preparation of quarterly consolidated financial statements: Yes
- Changes in accounting policies and accounting estimates
1. | Changes caused by revision of accounting standards: | Yes |
2. | Changes other than (3) - 1. above: | None |
3. | Changes in accounting estimates: | None |
4. | Restatements: | None |
- Number of shares outstanding (common stock)
1. Number of shares outstanding (including treasury stock)
As of September 30, 2022: 132,960,000 shares | As of December 31, 2021: 132,960,000 shares |
2. Number of treasury stock | |
As of September 30, 2022: 1,094 shares | As of December 31, 2021: 1,020 shares |
3. Average number of common shares outstanding
As of September 30, 2022: 132,958,906 shares | As of September 30, 2021: 132,958,981 shares |
(Indication of quarterly review procedure implementation status)
This quarterly earnings report is not subject to quarterly review procedures based upon the Financial Instruments and Exchange Act.
(Forward - looking statements)
The financial forecasts and estimates in this release are based on information available at the time of disclosure and certain assumptions judged to be reasonable by the Company. Actual results may differ materially from expectations due to various factors.
The governing language of this quarterly earnings report is Japanese. An English translation hereof is provided for reference purpose only.
Contents | ||
1. Qualitative information on financial results for the third quarter ended September 30, 2022 | ||
(1) | Qualitative information on consolidated operating results---------------------------------------- | 2 |
(2) | Qualitative information on consolidated financial position--------------------------------------- | 4 |
(3) | Qualitative information on consolidated earnings forecasts-------------------------------------- | 4 |
2. Quarterly consolidated financial statements | ||
(1) | Quarterly consolidated balance sheets--------------------------------------------------------------- | 5 |
(2) | Quarterly consolidated statements of income and comprehensive income--------------------- | 7 |
(3) | Notes to quarterly consolidated financial statements ---------------------------------------------- | 9 |
(Notes for assumption of going concern)------------------------------------------------------------ | 9 | |
(Notes for significant changes in the amount of shareholders' equity)-------------------------- | 9 | |
(Application of accounting procedures specific to preparation of quarterly consolidated | ||
financial statements) ----------------------------------------------------------------------------------- | 9 | |
(Changes of accounting policy) ----------------------------------------------------------------------- | 9 | |
(Segment information) --------------------------------------------------------------------------------- | 9 |
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1. Qualitative Information on Financial Results for the Third Quarter Ended September 30, 2022
(1) Qualitative information on consolidated operating results
In February 2022, McDonald's Holdings Company (Japan) Ltd. and its subsidiary (the "Group" or "we") announced its medium-term management plan (from 2022 to 2024) with the aim of sustainable growth, stronger profitability, and further enhancement of the corporate value of the Group. We will strengthen the foundation of the McDonald's business and actively invest in areas for the future to realize steady growth and meet the increasingly diverse and growing expectations of our customers. We will focus on the three pillars for future growth in the areas of "Brand," "Menu & Value," and "Restaurant, Digital, and People," aiming for an average annual growth rate of around 5% for all store sales, 3-5% for operating income, and 10% or more for RОE over the next three years.
In the cumulative third quarter, we continued to listen to the voices of our customers and made efforts to enhance their restaurant experience by improving QSC. Also, we have taken full measures to clean and sanitize our restaurants following requests from the Japanese and local governments to prevent the spread of COVID-19 and have operated restaurants with shortened open hours and thorough social distancing measures. An increase in same-store sales was gained for 28 consecutive quarters from 2015 Q4 to 2022 Q3.
On the other hand, profits were more challenging than expected at the beginning of the year, affected by sharp exchange rate fluctuations, soaring prices of raw materials such as wheat and beef, and rising energy, labor, and logistics costs. As a result of careful consideration of these effects, we have revised the over-the-counter prices of approximately 60% of our items, effective September
30. We will continue to work with importers and suppliers to procure raw materials on a global
scale, manage costs by building a more efficient distribution network, engage in currency hedging, reduce expenses, and make other maximum corporate efforts while flexibly implementing pricing strategies and other measures to provide the McDonald's-like hospitality that is close to each and every one of our customers.
(1) Brand
As a member of the local community, we have positioned sustainability as an essential issue to be addressed proactively and have designated "Food Quality & Sourcing," "Our Planet," "Community Connection," and "Jobs, Inclusion & Empowerment" as the four areas to be focused on. In March 2022, we published McDonald's concept and initiatives as Sustainability Report 2021 on our website.
"Food Quality & Sourcing": As a company that provides food, we prioritize ensuring "food safety" and are committed to the accurate operation of its food management system so that customers can enjoy safe meals. In addition to complying with relevant laws and regulations, we have established a strict quality control system that is compliant with the Global Food Safety Initiative (GFSI) and consists of McDonald's own standards. In addition, to enhance customer trust in our products, we are building and strengthening a thorough quality control system by disclosing information on the country of final processing and the main country of origin of major raw materials, as well as conducting audits of targeted suppliers.
"Our Planet": We use materials certified as sustainable, such as MSC (Marine Stewardship Council) and FSC (Forest Stewardship Council), recycle Happy Set toys, reduce the use of plastic materials, and reduce greenhouse gas emissions by introducing energy-saving equipment in our restaurants and electric three-wheeled bikes for delivery.
"Community Connection": We will strive to contribute to the local community through support to the Ronald McDonald House Charities Japan, sports support, education support, and the provision of safety whistles.
"Jobs, Inclusion & Empowerment": As an employer of 190,000 crew members nationwide, we are going to create a work environment in which a diverse range of people with different personalities and backgrounds, including gender, age, and nationality, can leverage their strengths and feel motivated to work.
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(2) "Menu and Value"
To meet our customers' expectations, we have strengthened our menu lineup for each time zone and implemented various initiatives to provide customers with a sense of value for their money which is in line with the "value-for-money" strategy. As for limited-time products, we launched "Cheese Loco Moco" and "Garlic Shrimp" burgers, both summer staples, and the new "Zakugiri Potato & Beef Jalapeno Mayo." In September, we added a new item to the "Tsukimi Burger, "an annual autumn staple, for eight items on the lineup, which many customers received well. In addition, we have renewed the name of our weekday lunchtime special set menus, the more familiar "Hiru-Mac," while maintaining the best price. We continue to offer the "Choi-Mac" series, in which customers can easily choose from a variety of products at a price from 100 yen to provide products that let customers experience McDonald's value through "Deliciousness," "Value," and "Convenience."
(3) "Restaurant, Digital and People"
Restaurant development: For future growth, we will actively invest in new restaurant openings, including relocations, renovations, and rebuilds to evolve our store portfolio to better meet the needs of our customers and local communities. We will provide a more convenient and comfortable environment for our customers by increasing the manufacturing capacity of our kitchens, adding drive-through lanes, and optimizing our delivery services.
In the cumulative third quarter of the current consolidated accounting period, we opened 39 and closed 31 restaurants, and the total number of restaurants at the end of this quarter is 2,950. In order to effectively utilize management resources, we will continue to invest in improving customer satisfaction and business performance by flexibly allocating investments to new store openings, renovations and rebuilds.
Previous | Newly | Classification change | Current | |||
Classification | year-end | opened | Closed | reporting | ||
Increase | Decrease | |||||
period | ||||||
Company-operated | 867 | 15 | (12) | 0 | (6) | 864 |
Franchised | 2,075 | 24 | (19) | 6 | 0 | 2,086 |
Total | 2,942 | 39 | (31) | 6 | (6) | 2,950 |
Digital: With digital, we introduced "Mobile Order & Pay" as part of "Experience of the future", a fusion of digital and people. In order to continue to meet the needs of our customers, we aim to further enhance convenience and increase the number of users through functional enhancements, including the expansion of payment methods.
Delivery is a marketable area with great potential for growth moving forward. We offer delivery services through McDelivery Service (MDS) by McDonald's crew and external delivery partners such as UberEats, Demaecan, and others. As of September 2022, MDS is available in 952 restaurants, UberEats in 1,880, Demaecan in 1,933, making the total number of restaurants that offer delivery service to 2,191. In the future, we will continue to expand the number of restaurants and areas where we provide delivery services, aiming to improve customer convenience.
With drive-thru, we are increasing its capacity and introducing "Park & Go" to even more restaurants, allowing customers to receive items at their parking spot using "Mobile Order & Pay," which is available at 1,077 restaurants as of September 2022. In addition, the "Drive-Thru Mobile Order" function, which enables drive-thru pickup, has been added to the mobile ordering function of the official McDonald's app, and is now available at drive-thru restaurants nationwide (excluding some restaurants).
People: We believe that we have been able to meet our customers' expectations despite the drastic changes in the environment caused by the COVID-19 infection because of our people, or human resources, including approximately 190,000 crew members and restaurant employees. As such, we believe that hiring and training excellent human resources is the most important factor for business development, and we will continue to expand our investment in human resources. Digital CDP, training material that leverages digital devices, is available in 5 languages in addition to Japanese, contributing to improved understanding and reduced training hours of our crew. In the cumulative
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McDonald's Holdings Co (Japan) Ltd. published this content on 14 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2022 06:11:24 UTC.
