Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

McDonald's Falls on Announcing $1.2 Billion Hit for Russian Exit

Stock Markets May 16, 2022 07:38AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Geoffrey Smith 

Investing.com -- McDonald's (NYSE:MCD) stock edged down 0.4% in premarket trading on Monday after the fast-food giant said it had started a process to sell its restaurants in Russia to a local buyer.

The group said it expects to book a non-cash charge of around $1.2-$1.4 billion against earnings as a result. It also said it will recognize "significant foreign currency translation losses" previously recorded in shareholders' equity. 

It aims to keep its trademark present in the country, however. 

The announcement resolves much of the uncertainty hanging over the fate of its chain in Russia, which has been a valuable source of profit for the company since it first opened there over 30 years ago - albeit one that had contributed less in earnings since Russia's first invasion of Ukraine in 2014 and the consequent weakening of its economy.

"The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald's to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald's values," the company said in a statement.

McDonald's expansion in Russia after the fall of the Soviet Union had been a powerful symbol of the victory of consumer-led Capitalism over Communism at the end of the Cold War, but its retreat is unlikely to have the same symbolic status, given that hundreds of other western businesses have already beaten it to the punch. Many western companies had taken the first steps to wind down their businesses immediately, but the administrative process of exiting is proving less simple. Companies such as Heineken (AS:HEIN) and Nestle (SIX:NESN) are eager not to sell viable businesses for peanuts, and are also sensitive about abandoning their local workforces, which in many cases run into thousands. 

McDonald's had closed its restaurants in Russia on March 8, some two weeks after the invasion, but will pay its staff there until a deal is completed.

The news came on the same day that French automotive group Renault (EPA:RENA) announced that it has agreed to sell its own-brand business in Russia and its controlling stake in Avtovaz, the country's largest carmaker, back to Russian buyers, with Reuters reporting unnamed sources as saying that it would receive only a symbolic price of 1 ruble. 

 
McDonald's Falls on Announcing $1.2 Billion Hit for Russian Exit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Brad Albright
Brad Albright May 16, 2022 11:15AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I rarely eat at McDonalds any more, but I suppose I'll make an effort to patronize them again in support of them doing the right thing.
Kaushal Shah
Kaushal Shah May 16, 2022 9:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
pull back will not stop until small investors trap again🤣🤣🤣
Jeff Bernardi
Jeff Bernardi May 16, 2022 8:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's time to boycott Nestle and Heinz
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email