McDonald's reaps biggest NZ dividend in at least a decade

Wednesday 30th May 2012

McDonald's Restaurant New Zealand, the local arm of world's largest fast food chain, paid the biggest dividend in at least a decade as its US parent invests US$2.9 billion to expand its global empire.

The Auckland-based company paid a dividend of $154 million to its US parent for 2011, according to its latest financial statements. It last made payments in 2006 and 2007 at $227,000 a year. The New Zealand unit funded the dividend with a loan from the parent.

"McDonald Corp in America looks at all the subsidiaries around the world and they want to make the best use of their capital," said Simon Kenny, McDonald's New Zealand spokesman. "It's an inter-company payment - there is no risk to the New Zealand business."

The dividend payment far outstripped earnings for the latest year. Profit fell to $32 million in 2011 from $36 million a year earlier, according to the statements lodged with the Companies Office. Sales rose to $199 million from $197 million.

McDonald's New Zealand revenue is made up of 30 locally owned outlets and franchises and royalties from its remaining 130 stores.

Shares in McDonald's Corp have almost doubled in the past year, last trading at US$90.90. The fast food chain’s total net income rose 11 percent to US$5.5 billion, in the 12 months ended Dec. 31, while total sales increased 12 percent to US$27 billion.

In May the Big Mac seller announced it was almost doubling its Chinese workforce, hiring 70,000 employees to expand its presence in Asia. It plans to invest about US$2.9 billion renovating 2,400 existing outlets, while opening a further 1,300 restaurants in 2012. It will open 250 stores in China and Europe and 175 new restaurants in the US.

That's all part of the retailer's goal of "intensifying our efforts toward the global priorities," Jim Skinner, outgoing chief executive of McDonald's Corp, said in the parent company’s annual report. "Continuing to deliver strong value across every price tier, extending our operating hours at more locations and strategically opening new restaurants in both emerging and mature markets will make us more available more often."

New Zealand rival Restaurant Brands, which operates the local outlets of KFC and Pizza Hut, posted a net profit of $18.4 million in the 12 months ended Feb 29, down from $25.1 million in the same period last year. The company flagged a 4.9 percent decrease in sales to $308.9 million on the closure of Christchurch's earthquake-damaged stores and the sale of Pizza Hut outlets.

BusinessDesk.co.nz

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