McDonald's Thrives Overseas

McDonald's Profit Rises 23% On Strong Overseas Results

By RICHARD GIBSON
April 22, 2008 11:56 a.m.

McDonald's Corp., powered by a robust performance overseas, posted a surprisingly strong 24% jump in first-quarter earnings.
But the quarter was marked by the first decline in monthly U.S. comparable sales in five years -- down 0.8% in March -- an indication that even the fast-food giant isn't immune to the domestic economic downturn. The previous negative month was March 2003, when comparable U.S. sales dropped 1.2%.

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March's performance was partly attributed to this year's early Easter, which reduced restaurant traffic over that weekend. The company forecast a rebound in April.
The Oak Brook, Ill., company earned $946.1 million, or 81 cents a share, compared with $762.4 million, or 62 cents a share, a year earlier. The per-share result beat analysts' average estimate by 11 cents.
Revenue rose 6%, to $5.61 billion from $5.29 billion, as global same-store sales grew 7.4%.
Europe's revenue soared 23% to nearly $2.4 billion, stoked by a record 11% increase in comparable-store sales. Comparable sales in Asia/Pacific Middle East and Africa climbed 9.4%, with Australia and China among the leading markets, the company said.

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For the quarter, the company's 13,000-plus U.S. restaurants delivered a 2.9% gain in comparable sales while operating income rose 5%.
Although the slippage in March domestic sales stood out, several analysts played down its importance. "Not too concerning given improvement in April" as well as the forthcoming launch of Southern style chicken biscuits and sandwiches, J.P. Morgan Securities said.
"Aside from this data point, overall business momentum appears very strong," Goldman Sachs said. UBS Securities said "there is a lot of energy in the MCD system that will yield solid EPS upside in '08."
Shares of McDonald's were trading recently at $58.40, down 27 cents, or 0.5%, on the New York Stock Exchange, where the stock is a component of the Dow Jones Industrial Average.