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McDonald's Posts Rare Sales Miss as Middle East Boycott Weakens Overseas Business

A sign for the US fast food restaurant chain McDonald's is seen outside one of their restaurants in Sint-Pieters-Leeuw, near Brussels, Belgium September 5, 2023. (Reuters)
A sign for the US fast food restaurant chain McDonald's is seen outside one of their restaurants in Sint-Pieters-Leeuw, near Brussels, Belgium September 5, 2023. (Reuters)
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McDonald's Posts Rare Sales Miss as Middle East Boycott Weakens Overseas Business

A sign for the US fast food restaurant chain McDonald's is seen outside one of their restaurants in Sint-Pieters-Leeuw, near Brussels, Belgium September 5, 2023. (Reuters)
A sign for the US fast food restaurant chain McDonald's is seen outside one of their restaurants in Sint-Pieters-Leeuw, near Brussels, Belgium September 5, 2023. (Reuters)

McDonald's reported its first quarterly sales miss in nearly four years on Monday on weak sales growth at its international business division, partly due to the conflict in the Middle East, sending the company's shares down about 4%.

The burger giant is among several Western brands that have seen protests and boycott campaigns against them over their perceived pro-Israeli stance in the Israel-Hamas conflict.

McDonald's said the war had "meaningfully impacted" performance in some overseas markets in the fourth quarter.

With the most pronounced hit in the Middle East, the company also saw an impact to business in countries such as Malaysia and Indonesia, as well as in France, CEO Chris Kempczinski said on a post-earnings call.

"So long as this war is going on ... we're not expecting to see any significant improvement (in these markets)."

Comparable sales in McDonald's International Developmental Licensed Markets segment rose 0.7% in the fourth quarter, widely missing estimates of 5.5% growth, according to LSEG data. The business accounted for 10% of McDonald's total revenue in 2023.

"The effects (of the war) on earnings durability would be our biggest concern ... it looks like this is going to be an issue that persists past the next quarter or maybe even two," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which holds McDonald's shares.

Starbucks last week also cut its annual sales forecast, partly due to a hit to sales and traffic at stores in the Middle East.

Consumer spending in China, McDonald's second-largest market, has also remained weak despite government support measures.

While McDonald's does not provide a breakup of sales in individual international markets, it noted industry-wide promotions picked up in China during the quarter as restaurants rush to revive flagging demand.

McDonald's US business also showed signs of weakness, particularly with low-income consumers reducing order sizes or trading down to cheaper items.

That resulted in US comparable sales rising 4.3% in the quarter, just shy of estimates of a 4.4% rise.

Still, McDonald's reported an adjusted per-share profit of $2.95, beating estimates of $2.82.

"It's going to take some time for the results to bounce back (in the Middle East)," Stephens analyst Joshua Long said, but added he was still positive on McDonald's stock as it is "one of the best positioned brands" to navigate a tricky macroenvironment.

McDonald's forecast 2024 operating margin to be in the mid-to-high 40% range and expects more than 1,600 net restaurant additions this year. It reported an operating margin of 45.7% for 2023.

Global same-store sales rose 3.4% in the quarter, missing estimates of a 4.9% rise, in what was its slowest sales growth in about three years.

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Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
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Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat

Saudi Minister of Finance Mohammed Aljadaan stressed Sunday that the world economy is going through a “profound transition,” saying emerging markets and developing economies now account for nearly 60 percent of the global Gross Domestic Product (GDP) in purchasing power terms and over 70 percent of global growth.

In his opening remarks at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla, the minister said these economies have become an increasingly important driver of global growth with their share of global economy more than doubling since 2010.

“Today, the 10 emerging economies in the G20 alone account for more than half of the world growth. Yet, they face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”

“Unfortunately, more than half of low income countries are either in or at the risk of debt distress. At the same time global trade growth has slowed at around half of what it was pre the pandemic,” Aljadaan added.

The Finance Minister stressed that the Saudi experience over the past decade has reinforced three lessons that may be relevant to the discussions at the two-day conference, which brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics.

“First, macroeconomic stability is not the enemy of growth. It is actually the foundation,” he said.

“Structural reforms deliver results only when institutions deliver. So there is no point of reforming ... if the institutions are unable to deliver,” he stated.

Finally, he said that “international cooperation matters more, not less, in a fragmented world.”

Business

Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
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Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Sunday that world growth still lacks pre-pandemic levels, expressing concern as she expected more shocks amid high spending and rising debt levels in many countries.

Georgieva spoke at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla.

The two-day conference brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics to deliberate on policies to global stability, prosperity, and multilateral collaboration.

Georgieva said that the conference was launched last year in recognition of the growing role of emerging market economies in a world of sweeping transformations.

“I came out of this gathering .... With a sense of hope for the pragmatic attitude and determination to pursue good policies and build strong institutions,” she said.

Georgieva stressed that “good policies pay off,” and said that growth rates across emerging economies reached four percent this year, exceeding by a large margin those of advanced economies that are around 1.5 percent.

Business

Saudi Arabia’s flynas, Syrian Civil Aviation Authority Partner to Launch 'flynas Syria'

The new airline will operate commercial air transport services in accordance with approved regulations and standards (flynas)
The new airline will operate commercial air transport services in accordance with approved regulations and standards (flynas)
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Saudi Arabia’s flynas, Syrian Civil Aviation Authority Partner to Launch 'flynas Syria'

The new airline will operate commercial air transport services in accordance with approved regulations and standards (flynas)
The new airline will operate commercial air transport services in accordance with approved regulations and standards (flynas)

Saudi budget carrier flynas has signed an agreement with the Syrian General Authority of Civil Aviation and Air Transport to establish a new commercial airline under the name "flynas Syria," with operations scheduled to begin in the fourth quarter of 2026.

Saturday’s agreement comes within the framework of bilateral cooperation between Saudi Arabia and Syria, as well as the strategic investment agreements between the two countries, coordinated with the Saudi Ministry of Investment and the Syrian General Authority of Civil Aviation and Air Transport.

The new airline will operate commercial air transport services in accordance with approved regulations and standards, meeting the highest safety and aviation security requirements. All licensing and operational procedures will be completed in coordination with the relevant authorities.

The carrier will be established as a joint venture, with 51% ownership held by the Syrian General Authority of Civil Aviation and Air Transport and 49% by flynas.

The new airline will operate flights to several destinations across the Middle East, Africa, and Europe. This expansion aims to bolster air traffic to and from Syria, enhance regional and international connectivity, and meet growing demand for air travel.

"This step is part of our commitment to supporting high-quality cross-border investments. The aviation sector is a key enabler of economic development, and the establishment of 'flynas Syria' serves as a model for constructive investment cooperation,” said Saudi Minister of Investment Khalid Al-Falih.

“This partnership enhances economic integration and market connectivity and supports development goals by advancing air transport infrastructure, ultimately serving the mutual interests of both nations and promoting regional economic stability,” he added.

President of the Syrian General Authority of Civil Aviation and Air Transport Omar Hosari also stated that the establishment of flynas Syria represents a strategic step within a comprehensive national vision aimed at rebuilding and developing Syria's civil aviation sector on modern economic and regulatory foundations.

“This will be achieved while balancing safety requirements, operational sustainability, investment stimulation, and passenger services. The partnership reflects the state's orientation toward smart cooperation models with trusted regional partners, ensuring the transfer of expertise, the development of national capabilities, and the enhancement of Syria's air connectivity with regional and international destinations, in line with global best practices in the air transport industry."

flynas Chairman Ayed Al-Jeaid stated that the company continues to pursue strategies aimed at growth and international expansion, describing the agreement as a historic milestone in the company's journey and a promising investment model in partnership with Syria.

flynas CEO Bander Al-mohanna said the step represents a qualitative leap in the company's strategy and financial performance, highlighting the transfer of the company's low-cost aviation experience to the Syrian market to support regional and international air connectivity.

flynas currently operates 23 weekly flights from Riyadh, Jeddah, and Dammam to Damascus, including two daily direct flights from Riyadh, one daily flight from Jeddah, and two weekly flights from Dammam.

The airline made history on June 5, 2025, by adding the Syrian capital to its network, becoming the first Saudi carrier to resume scheduled flights to Damascus.