Business / Corporate

McDonald's suffers ¥7 billion loss over meat scandal

Kyodo

McDonald’s Holdings Co. (Japan) on Thursday reported a group net loss of ¥7.54 billion for the January-September period as sales slumped in the wake of the food safety scandal involving a China-based meat supplier.

That compared with a profit of ¥6.39 billion a year earlier. The fast-food chain also forecast a ¥17 billion net loss for all of 2014, which would be its first swing into the red in 11 years.

For the nine months to Sept. 30, operating profit plunged 97.8 percent to ¥238 million on sales of ¥172.25 billion, down 12.7 percent.

The company said the supplier problem will cost it ¥20 billion to ¥25 billion in lost sales for the year, not nearly as bad as its earlier forecast of ¥45 billion.

But it maintained its full-year forecasts released last month, which project an operating loss of ¥9.4 billion on sales of ¥221 billion, down 15.1 percent from the previous year.

Last year the company posted a net profit of ¥5.14 billion and an operating profit of ¥11.52 billion on sales of ¥260.44 billion.

McDonald’s Japan has halted all imports of chicken products from China since July, when a Chinese supplier was caught relabeling expired meat and breaching other hygiene rules.

While switching its chicken sourcing to Thailand and planning to also import from Brazil, the company expects to log a ¥2.7 billion write-off for unsold chicken from China.

The company will invest in measures to improve quality management, including unannounced audits of suppliers and distribution of more food-quality information to customers.

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