(Reuters) – McDonald’s reported quarterly sales below expectations on Monday for the first time in almost four years, as the group was hit by weak sales growth in its business division which includes the Middle East, China and India.
The company’s net profit, however, rose 7% in the fourth quarter, thanks to higher menu prices and lower raw material costs.
The action of the American fast food giant fell by around 2% in pre-market trading.
Like-for-like sales in the licensed international development markets segment grew 0.7% in the quarter ended December 31, well below growth estimates of 5.5%, according to data from the LSEG.
This activity represented 10% of McDonald’s overall turnover during the first nine months of 2023.
The group’s chief executive, Chris Kempczinski, last month reported a “significant commercial impact” on McDonald’s market in the Middle East and some areas outside the region due to the conflict between Israel and Hamas as well as “associated misinformation” about the brand.
McDonald’s is one of the Western brands that have been the subject of protests and boycott campaigns because of their stance considered pro-Israeli.
Last week, the Starbucks coffee chain lowered its annual sales forecast, in part due to a drop in sales and footfall at its establishments in the Middle East.
Consumer spending in China, McDonald’s second-largest market, also remained weak despite the Chinese government’s economic support measures.
McDonald’s U.S. operations are also starting to show signs of weakness. Attendance at the group’s American restaurants fell 13% in October, according to Placer.ai data cited by Wells Fargo.
McDonald’s global like-for-like sales rose 3.4% in the quarter, compared with estimates for a 4.9% rise.
This is the lowest sales growth in about three years.
Excluding one-time items, McDonald’s reported earnings per share of $2.95, compared to $2.82 per share expected by analysts.
(Writing by Deborah Sophia in Bangalore; French version Diana Mandiá, edited by Kate Entringer)
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