ID :
336735
Wed, 07/30/2014 - 01:51
Auther :

McDonald's Withdraws Earnings Estimate after Meat Scandal

Tokyo, July 29 (Jiji Press)--McDonald's Holdings Co. (Japan) <2702> said Tuesday it has withdrawn its full-year earnings projection through December 2014 in the wake of a recent chicken meat scandal in China. The impact of the problem on earnings cannot be estimated in a rational way, senior company official Ro Imamura said at a press conference. The fast food giant stopped selling all chicken products last week that are made in China amid growing safety concerns after a recent revelation that Shanghai Husi Food Co., a Chinese supplier, has been using chicken meat past its expiration date. It now sources all chicken products from Thailand. "The news...was incredibly disturbing to us, appalling," Sarah Casanova, president of McDonald's Holdings, said at the press conference. "The activities alleged are completely unacceptable." Imamura explained that the company has lost 15 pct to 20 pct of its daily sales recently due to the problem. It is difficult to see a year-on-year increase in same-store sales this year, he said. He also cited the possibility of the company incurring losses worth billions of yen as a result of disposing of product stocks sourced from China. The company is bracing for an operating profit drop for the third straight year. It previously projected a group operating profit of 11,700 million yen for the current business year, up from the preceding year's 11,524 million yen. Casanova said the company will disclose online the country of origin and final production country of the ingredients for all menu items and send quality control inspectors to its suppliers in China and Thailand as additional safety measures. The company will also strengthen checking systems in Japan, Casanova said. "At this point, we have no plans to reimburse," said Casanova, noting that there is no evidence that bad chicken products were destined for Japan. "If the fact changes in the future, we will reconsider our decision," she said. McDonald's Holdings is to file a suit demanding compensation from the Chinese company when the full scope of the scandal is revealed. In the six-month period through June 30, consolidated sales at the company fell 6.7 pct from a year before to 121 billion yen and operating profit plunged 50.3 pct to 3,512 million yen, falling for the third straight year on a first-half basis. Casanova has introduced menu changes at McDonald's in the hope of attracting more families and women, but monthly sales have fallen from a year before since February on a same-store basis. END

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