McDonald’s Japan Affected by Shanghai Husi Expired Meat Scandal
McDonald’s Japan Hits by Expired Meat Scandal
McDonald’s Japan forecast on Tuesday a net loss of $156.7 million for 2014, its first loss in 11 years, after a food safety scandal of China expired meat affair hit sales already weakened by stiff competition from convenience stores.
The announcement brought further gloom for McDonald’s, which holds 49.9 percent of McDonald’s Japan, and has been struggling globally with falling sales.
“Customers have expressed a lack of confidence in our food quality, and I take responsibility for that,” McDonald’s Japan Chief Executive Sarah Casanova told a media briefing, at which she also forecast an operating loss of $86 million for the year to Dec. 31.
“It’s our intention to try to turn this business around as fast as we can.”
Shares in McDonald’s Japan were down 2.7 percent at 2,630 yen after the company announced the news conference, reversing earlier gains.
Chief Executive Officer Sarah Casanova will attend the briefing, to be held in Tokyo at 3:30 p.m. (0630 GMT).
Before the withdrawal, The company, held 49.9 percent by McDonald’s Corp, had forecast an operating profit of 11.7 billion yen ($107 million) and net profit of 6 billion yen for the year.
McDonald’s Japan halted all imports of chicken products from China in late July after the Chinese supplier, Shanghai Husi, was shut down for food safety breaches.
Sarah Casanova Can Turn It Around?
Sarah Casanova, since March this year president and CEO of Japan McDonald’s Holdings (Tokyo: 2702), cannot enjoy being in the latter category.
In a news conference in Tokyo September 7 Casanova announced that this calendar year the company she heads will record a JPY 17 billion (USD 157 million) loss on sales of JPY 221 billion (USD 2.1 billion), against a JPY 5.1 billion (USD 47 million) profit on sales of JPY 260 billion (USD 2.4 billion) in 2013. Operating income will be negative JPY 9.4 billion (USD 87 million) against a positive JPY 11.5 billion (USD 107 million). It will be the first loss in eleven years and the first operating loss since the company’s listing in 2001.
Needless to say, Casanova would have previewed her announcement with higher ups in McDonald’s Corporation (NYSE: MCD) whose September 9 announcement of August global sales was also dismal. Worldwide comparable sales in August were down by 3.7%. Within an overall slump, Japan and China (also Russia, probably because of retaliation for U.S. sanctions) were among the worst performers.
*Extended read: 340 Workers Were Fired by Shanghai Husi , 6 Husi Food executives face arrest in meat scandal, McDonald and KFC’s Supplier Is Blasted To Use Expired Meat.
*Notes: (1 US dollar = 109.0800 Japanese yen)
*The article was collected and revised by WELLGREEN PROCESS SOLUTIONS– Sanitary valves and fittings to your food safety.