McDonald’s net income hits $8.2bn in 2024 despite market challenges

Overview

McDonald’s reported on 10th February strong systemwide sales of over $130bn in 2024, with full-year revenue growing by $1bn. Despite modest comparable sales growth, McDonald’s loyalty program continued to expand, with $30bn in systemwide sales to loyalty members and over 175m active users worldwide.

CEO Chris Kempczinski reaffirmed the company’s long-term strategy, stating: “Accelerating the Arches continues to be the right strategy as we focus on growing market share. We’re playing to win by delivering outstanding value, exciting menu innovation, and culturally relevant marketing.”

Q4 2024 vs. Q4 2023:

• Revenues remained relatively unchanged at $6.4bn, while operating income reached $2.9bn (+2% YoY).
• Net income decreased very slightly to a value of $2.0bn (-1% YoY), and diluted EPS remained unchanged compared to Q4 2023, at the level of $2.80.
• Global comparable sales increased 0.4%, of which:
  • U.S. decreased 1.4%, primarily due to lower average check sizes, despite modest guest count growth.
  
  
  • International Operated Markets segment increased 0.1%, driven by mixed results across the markets. Results reflected positive comparable sales in most markets.
  
  
  • International Developmental Licensed Markets segment increased 4.1%, reflecting positive comparable sales, led by the Middle East and Japan.
• Systemwide sales increased 2%, reflecting steady global expansion.

Full-Year 2024 highlights:

• Total revenues recorded a value of $25.9bn (+2% YoY), while operating income reached $11.7bn (+1% YoY), thus reflecting two very insignificant increases and slightly below analysts’ estimates.
• Net income was on a slightly downward trend, reaching $8.2bn (-3% YoY), while diluted EPS also decreased very slightly, reaching $11.39 (-1% YoY).
• Global comparable sales decreased very slightly, almost insignificantly, with -0.1%, reflecting market fluctuations.
  • U.S. increased 0.2%, driven by value meal strategies and menu innovation.
  
  
  • International Operated Markets segment decreased 0.2%, impacted by soft performance in the U.K.
  
  
  • International Developmental Licensed Markets segment decreased 0.3%, affected by regional economic slowdowns.
• Free cash flow decreased compared to last year, to a value of $6.7bn (-8% YoY), but still suggesting continued good liquidity.
• Systemwide sales increased 1%, generating $30bn in systemwide sales from loyalty users.
• The company opened over 1,500 new locations globally, with a focus on high-growth markets.

For 2025, McDonald’s expects modest revenue growth, driven by loyalty expansion, menu innovation, and digital engagement. The company projects global comparable sales growth to remain positive, with a rebound in U.S. sales. Systemwide sales growth is expected to increase by a low single-digit percentage, reflecting continued global expansion. Capital expenditures are forecasted between $2.8bn and $3.2bn, focusing on new restaurant openings and enhancing digital infrastructure. Additionally, McDonald’s projects EPS growth in the low single digits, supported by cost efficiency measures aimed at maintaining profitability and driving long-term growth.

Even though the main results were below the expectations of Wall Street analysts, and the company had a rather complicated year, after the publication of the results, MCD’s share price experienced a significant increase, ending the trading day with an increase of almost 5%.

Author: Ionuț-Adrian Lazar