McDonald’s Corp (NYSE:MCD)’S Shares Surge As CFO Announces Costs Cutting And Increased Borrowing Funds For Investor Returns

Steve Hackney - March 12, 2014

Boston, MA 03/12/2014 (wallstreetpr) – McDonald’s Corp (NYSE:MCD), the world’s largest restaurant chain, surged highest in more than 2 years after Chief Financial Officer Pete Bensen announced plans to cut costs and to borrow money to return to investors.

McDonald’s shares rose 3.8% to $98.78 at the close in New York. This is the company’s highest gain since August 9, 2011. Illinois based McDonald’s Oak Brook climbed 1.8% this year while the Standard & Poor’s 500 Restaurants Index has surged 0.5%.

New Plans

At an investor conference today, Bensen said that the company is dynamically looking at means to optimize its capital structure. It is also seeking to at the same time maintain its long term financial strength. He added that the tasks include scrutinizing general and administrative costs and selling stores to franchisees in countries like China, Taiwan and South Korea. He further said that the company might even get more vigorous as far as borrowings are concerned without lowering its credit rating. He said that if the company increases its leverage, it may even look at increasing its aim of returning $5 billion in cash to shareholders.

Declining Sales

McDonald’s has been seeking to turn around falling same stores sales in addition to wavering consumer confidence and unfavorable weather conditions. The company, which has as many as 35,400 stores across the globe and around 81% of these are franchised, informed yesterday that its sales at locations open at least 13 months have fallen 0.3% in February. This was on account of the declines in the U.S. and its Asia Pacific stores as also in the Africa and Middle East regions.

A New York based analyst at Telsey Advisory Group, Peter Saleh said that McDonald’s is basically seeking ways to reduce expenses. The company is also looking at re-franchising more while less corporate ownership for them would results in less G&A.

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Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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