010301 McDonald's Japan Unit to Go Public in July

Tokyo - U.S. fast food giant McDonald's Corp said its Japanese unit would become its first global subsidiary to go public, listing on either Nasdaq Japan or the country's over-the-counter market.

"We've decided to go public in July, but we're still considering which exchange we should be listed on," Den Fujita, president of McDonald's Co (Japan) said.

Its planned stock market debut -- the first among global units of the world's biggest fast-food chain --- is viewed as one of this year's hottest initial public offerings, along with that of Dentsu Inc, the world's largest advertising agency.

Fujita said that if his company decided to list on Nasdaq Japan, its market capitalisation could be larger than the total of those already listed on the exchange. Nasdaq Japan was created last year as a new section of the Osaka Securities Exchange.

"That could make our company too influential on the exchange," he said, without elaborating.

Fujita was speaking after the company announced its earnings results for the last calendar year. It posted a parent-only pre-tax profit of 29.30 billion yen ($252.3 million), down 6.72% from a year earlier, marking its first profit decline in seven years.

The slide came despite record sales of 431.1 billion yen, including those at its franchise outlets, for the year. The unit said reallocation of McDonald's outlets in Japan, spending for fresh equipment and outlet renovations ate into profits.

The profit figures include gains and losses from non-operational activities such as stock investments.

McDonald's Japan operated 3,598 outlets as of the end of December. It has halved the prices of its its mainstay hamburgers and cheeseburgers on weekdays since February 24 last year, leading to a 4.8 fold jump in annual sales for these products on weekdays, the company said.

McDonald's Fujita told reporters his company may cut prices further depending on foreign exchange rates. If the yen jumps to a rate of 90 yen to the dollar, hamburger prices would fall to 45 yen from a current weekday price of 65 yen, he said.

The Japanese unit has already launched fierce price-competition, hurting earnings at other hamburger chain operators in Japan including Mos Food Services Inc , which operates more than 1,500 "Mos Burger" chain shops.

Mos Food in November warned of a 65.2% drop in its group net profit in the year ending next March.

Japan Tobacco Inc , the world's third biggest tobacco group, also announced this month that it would sell all 25 outlets of its Burger King fast food chain in Japan to another domestic hamburger chain Lotteria Co, incurring a special liquidation loss of two billion yen.

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