McDonald's Japan withdraws profit guidance after China food scare

Tue Jul 29, 2014 4:33am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

TOKYO (Reuters) - McDonald's Holdings Co (Japan) withdrew its earnings guidance for the year on Tuesday and said it was working on a contingency plan after a major meat supplier in China was shut down by regulators for food safety breaches.

It also said it would consider seeking damages from the supplier.

The Japanese unit of the world's biggest hamburger chain immediately switched to alternative chicken supplies both in China and Thailand after the scandal broke last week.

But days later it narrowed its sourcing to two existing suppliers in Thailand due to Japanese consumers' widespread distrust of food originating in China.

McDonald's Japan had forecast an operating profit of 11.7 billion yen ($115 million) for the full year to Dec. 31, up 1.5 percent from 2013, and net profit of 6 billion, up 17 percent.

For the six months to June 30 it reported a 50 percent plunge in operating profit to 3.5 billion yen and a 59 percent drop in net profit to 1.85 billion yen.

It also said on Tuesday it was considering sourcing some meat from Brazil. Chief Executive Sarah Casanova said that while its Thai suppliers had enough capacity to handle Japanese demand, the company needed a contingency plan.

Casanova said McDonald's Japan would also begin providing more information on the country of origin and processing for its ingredients and step up inspections of suppliers.

The Shanghai Husi meat scandal has flared up just as McDonald's Japan is scrambling to reverse two straight years of falling sales, including by offering more chicken-based items to expand its menu.   Continued...

McDonald's Holdings Co (Japan) President and Chief Executive Officer (CEO) Sarah Casanova speaks during a news conference in Tokyo July 29, 2014. REUTERS/Yuya Shino