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McDonald's to exit Russia by selling restaurants to local buyer, expects to book $1.2 billion to $1.4 billion charge

McDonald's Corp. (MCD) said Monday it has decided to exit the Russia market following Russia's unprovoked invasion of neighboring Ukraine and has started the process of selling its entire portfolio of restaurants. "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 fast-food chain said in a statement. It is pursuing a sale to a local buyer and will seek to make future employment for its 62,000 workers part of the terms. The company expects to book a charge of $1.2 billion to $1.4 billion to cover the costs of the move. The sale will involve "de Arching" all restaurants, no longer allowing the use of its name, logo, branding and menu although it will retain its trademarks in Russia. McDonald's restaurants in Ukraine remain closed for now, although workers are still being paid and the company is supporting aid and relief efforts for refugees across Europe. The company expects operating margin of about 40% for 2022 because of the Russia charge. It expects adjusted operating margin in the mid-40% range. It expects 2022 capex to range from $2.1 billion to $2.3 billion. Shares were down 0.5% premarket and have fallen 9% in the year to date, while the Dow Jones Industrial Average has fallen 11.4%. See now: Yale professor monitoring companies still doing business in Russia ups the ante by highlighting those that are now 'digging in'

-Ciara Linnane

 

(END) Dow Jones Newswires

05-16-22 0722ET

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