Fitch affirms McDonald's ratings

by Bakingbusiness Staff
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CHICAGO — Fitch Ratings on Sept. 30 affirmed its ratings for Oak Brook, Ill.-based McDonald’s Corp., including "A" ratings for the company’s long-term issuer default rating, bank credit facility and senior unsecured debt. Fitch assigned a "stable" rating to McDonald’s outlook.

"McDonald's ratings reflect its substantial cash flow generation, considerable financial flexibility, leading global market position and well established franchisee network," Fitch said. "Cash flow from operations (C.F.O.) has grown at a 13% compound annual rate since 2003 and free cash flow (defined as C.F.O. less capital expenditures and dividends) has grown 6%. For the latest 12-month period ended June 30, 2009, C.F.O. and free cash flow totaled $5.7 billion and $1.6 billion, respectively."

Fitch said it expects McDonald’s near-term cash flow generation and free cash flow to remain strong behind same-store sales growth; moderating food cost inflation and continued benefits from refranchising company units. In addition, Fitch said McDonald’s franchisee royalty stream is a "sizeable and stable source" of on-going cash flow.

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