Value meals, new chicken snack boost McDonald’s sales, profits
Cheap eats, $1 sodas and a new chicken snack helped bring more people to McDonald’s, the company said Tuesday.
The world’s largest hamburger chain said U.S. sales rose 4.5 percent at established locations during the fourth quarter, thanks to its two-for-$5 deal called McPick 2, soda promotions and new Buttermilk Crispy Tenders. Its delivery service, which it is expanding, also helped. Worldwide, sales rose 5.5 percent at established restaurants.
“We served more customers more often,” said CEO Steve Easterbrook.
Value menus have become increasingly important to fast food companies looking to boost sales. Earlier this month, McDonald’s replaced McPick 2 by reviving the name of its once-popular Dollar Menu, but this time items cost $1, $2 or $3. About the same time, fellow burger chain Wendy’s expanded its four-for-$4 menu, which includes chicken sandwiches, spicy wraps and bacon cheeseburgers.
On Tuesday, McDonald’s also reported better-than expected earnings with net income of $698.7 million, or 87 cents per share, in the three months ending Dec. 31. Adjusted earnings were $1.71 per share, beating the $1.59 per share analysts expected, according to Zacks Investment Research. It reported revenue of $5.34 billion, above the $5.26 billion analysts expected.
Pfizer profits up from tax changes
Pfizer’s fourth-quarter profit soared to $12.27 billion thanks to a huge tax benefit related to the U.S. tax system overhaul.
The biggest U.S. drugmaker Tuesday reported an $11.34 billion benefit, mainly from recalculating deferred tax liabilities. Pfizer also said it will take a charge of approximately $15 billion, payable to the Treasury over eight years, to cover taxes on profits held overseas it plans to bring back to the U.S.
Pfizer said it plans over the next five years to invest roughly $5 billion in capital projects in the U.S., including strengthening its U.S. manufacturing “presence.” It plans to spend about $100 million as a one-time bonus for non-executive employees.
The company issued a forecast for adjusted 2018 earnings of $2.90 to $3 per share, higher than in the past couple of years, with revenue in the range of $53.5 billion to $55.5 billion.
The maker of Viagra and pain medicine Lyrica said its net income for the fourth quarter amounted to $2.02 billion. A year earlier, Pfizer posted net income of $775 million, or 13 cents per share.
Aetna beats profit forecast
Aetna Inc. on Tuesday reported fourth-quarter profit of $244 million, or 74 cents per share. Earnings, adjusted for one-time gains and costs, came to $1.25 per share.
The results topped Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $1.18 per share.
The health insurer posted revenue of $14.85 billion in the period. Its adjusted revenue was $14.74 billion, missing Street forecasts. Seven analysts surveyed by Zacks expected $14.89 billion.
Aetna shares have climbed slightly more than 7 percent since the beginning of the year, while the Standard & Poor’s 500 index has increased roughly 7 percent. The stock has increased 65 percent in the last 12 months.
Harley shuts down plant in Missouri
Harley-Davidson Inc. will close its Kansas City, Mo., plant as part of a cost-cutting move as it sells fewer of its iconic motorcycles.
The Milwaukee-based company reported a 7.9 percent drop to 241,498 motorcycle shipments in 2017 and expects the figure to continue dropping. It forecast 231,000 to 236,000 motorcycle shipments in 2018.
“The decision to consolidate our final assembly plants was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment,” said President and CEO Matt Levatich.
U.S. motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. They’ve had trouble coming out of that trough because of demographic shifts. As baby boomers stop riding, there aren’t enough millennials taking up the slack, analysts say.
Specifically, Harley-Davidson said it is consolidating the Kansas City assembly plant into its York, Pa., facility. The move will mean 800 layoffs at the Kansas City facility, beginning midyear, and it will close by the third quarter of 2019.
The company said it will add up to 450 new positions at the York facility.
It expects to book restructuring and other costs of $170 million to $200 million and capital investment costs of about $75 million over two years. The move is expected to lead to ongoing annual savings of $65 million to $75 million after 2020.
The motorcycle maker reported an 82 percent slide in fourth-quarter profit to $8.3 million, or 5 cents per share, partly on charge related to the new tax code. Earnings, adjusted for pretax expenses and non-recurring costs, were 54 cents per share.