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McDonald’s Japan withdraws earnings estimate after meat scandal

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McDonaldsTOKYO, July 30 – McDonald’s Holdings Co. (Japan) said Tuesday it has withdrawn its full-year earnings projection through December 2014 in the wake of a recent chicken meat scandal in China.

The impact of the problem on earnings cannot be estimated in a “rational way”, Japan’s Jiji Press news agency reports senior company official Ro Imamura
saying at a press conference.

The fast food giant stopped selling all chicken products last week that were sourced from China after a recent revelation that Chinese supplier Shanghai Husi Food Co. had been using chicken meat past its expiry date.

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McDonald’s Japan now sources all chicken products from Thailand. Imamura said the company had lost 15 to 20 percent of its daily sales recently due to the problem. “It is difficult to see a year-on-year increase in same-store sales this year,” he said.

McDonald’s Prosperity MealImamura also cited the possibility of the company incurring losses worth billions of yen as a result of disposing of product stocks sourced from China. The company is bracing for an operating profit drop for the third straight year.

It previously projected a group operating profit of 11,700 million yen (US$114.57 million) for the current business year, up from the preceding year’s 11,524 million yen. McDonald’s Holdings plans to to file a suit demanding compensation from the Chinese company when the full scope of the scandal is revealed.

In the six-month period through June 30, consolidated sales at the company fell 6.7 percent from a year before to 121 billion yen and operating profit plunged 50.3 percent to 3,512 million yen, falling for the third straight year on a first-half basis. (US$1 = JPY102.12)

-BERNAMA

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