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07/11/03 . by unknown . Yahoo.com . Tokyo
McDonald's Japan to wallow in red from job-cutting costs, business pullout
TOKYO (AFP) - McDonald's Japan said it will incur a group net loss for the second consecutive year in 2003 on slack sales, high costs of job-cutting and withdrawal from unprofitable businesses, reversing its earlier forecast of a net profit.
McDonald's Holdings Co. (Japan), Ltd. now expects to suffer a net loss of 3.7 billion yen (33.6 million dollars) in 2003, instead of the net profit of 2.1 billion yen it projected in August.
It revised down its forecast for pre-tax profit sharply to 1.48 billion yen from 3.15 billion yen, with the sales estimate lowered to 298.27 billion yen from 303.36 billion yen.
This was because "the company's sales on the existing-store basis for the third quarter 2003 have turned out to be a decrease of 7.2 percent, falling short of targets," it said in a statement.
The group will also incur a special loss of 3.53 billion yen from its early retirement programme that had been offered to employees aged 40 or older at the Tokyo head office of McDonald's Co. (Japan), Ltd.
It aims to trim 130 jobs, or 15 percent of its head office staff under the programme and 146 people have agreed to take up the offer, the company said.
Other extra losses include 2.53 billion yen from the withdrawal from the Pret A Manger sandwich chain business, 1.19 billion yen from the termination of the 'McVision' wide-screen in-store broadcasting business and 301 million yen incurred on disposing of the company's recreation facilities for employees.
McDonald's Co. (Japan), a subsidiary of the holding company, announced Friday it was injecting new blood into the board of directors.
Peter Beresford, who has led marketing for McDonald's Canada, has assumed the post of executive vice president in charge of operation, marketing, purchasing and business planning at McDonald's Japan.
Todd Tucker from the United States has become senior vice president and assistant to the chairman, overseeing human resources and global safety.
McDonald's Holdings in Japan last year posted a 2.34 billion yen net loss -- the group's first red ink in 29 years -- after spending 4.9 billion yen on closing outlets.
The company at the time said it had difficulty in wooing back customers after the outbreak of bovine spongiform encephalopathy or madcow disease in late 2001.
McDonald's Co. (Japan), founded in 1971, has since become the nation's largest fast-food restaurant chain and the biggest overseas unit of the US hamburger giant, with more than 3,700 stores nationwide.
US parent McDonald's Corp. owns a 50 percent stake in the Japanese company.
McDonald's shares, listed on the Jasdaq market for start-ups, closed up 10 yen or 0.49 percent at 2,040 yen Friday before the announcement was made.