McDonald’s To Sell Its Business In Russia

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McDonald’s‘ Corp (NYSE:MCD) decision to take one step further from the suspension of operations in Russia, to pushing on with the sale of its restaurants, isn’t too much of a surprise and the market’s reaction has been relatively subdued with shares broadly flat in pre-market trading. Pressure was mounting before the business announced its operations had been suspended back in March, and many were calling for a longer term pull out to be initiated.

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McDonald's' Suspension Of Service In Russia

With 850 restaurants in Russia, the suspension of service was also weighing on performance - with $127m of costs reported in Q1 with respect to closures in Russia and Ukraine. The sale’s expected to result in a non-cash charge of around $1.2bn-$1.4bn to write off its investment once the sale to an un-named local buyer completes. Looking past the impact it’ll have for this year, the Russian estate was largely made up of the less profitable company owned stores as opposed to franchised ones, and for many investors it’ll ease the uncertainty that previously lingered.”

Article by Matt Britzman, Equity Analyst, Hargreaves Lansdown

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