McDonald's profit tops view, sales growth slows
NEW YORK/LOS ANGELES
NEW YORK/LOS ANGELES (Reuters) - McDonald's Corp (MCD.N) reported a quarterly profit that handily topped Wall Street estimates, but said it saw growth in some overseas markets soften as a U.S.-led recession went global.
Shares of the world's largest hamburger chain were down 0.5 percent in afternoon trade after falling as much as 2.6 percent earlier in the session.
McDonald's posted a 5.8 percent rise in worldwide December sales at restaurants open at least 13 months.
The results are still ahead of most other restaurant operators, but mark a slowdown from the company's own November and October results, when McDonald's said same-store sales rose 7.7 percent and 8.2 percent, respectively.
Jack Russo, an analyst at Edward Jones, said the slowdown was most prominent in international markets and showed that the "rest of the world is catching up" to the U.S. recession.
The slowdown "is affecting everybody at this point. But compared to the other carnage out there, these guys are still doing pretty good," he said.
Fourth-quarter net income fell 23 percent to $985.3 million, or 87 cents per share, from $1.27 billion, or $1.06 per share, a year earlier, when results included a large tax-related benefit.
Analysts on average were expecting profit of 83 cents per share, according to Reuters Estimates.
McDonald's cited a "softening" in its business in Germany as diners reacted to price hikes. It also said fourth quarter same-store sales decelerated in China, where growth was once red-hot.
Company executives said the world's largest economies are sliding simultaneously into recession, but that McDonald's same-store sales continue to be strong in January, with each area of the world reporting positive results.
"Our model remains recession resistant," Chief Executive Jim Skinner said on a conference call with analysts.
McDonald's shares were down 22 cents at $57.80. Shares in rival Yum Brands Inc (YUM.N), which owns the Taco Bell, Pizza Hut and Kentucky Fried Chicken brands and has a bigger presence in China, fell 3.6 percent.
McDonald's, which offers a range of menu items for $1, has cemented its lead position by appealing to budget-conscious diners struggling with rising unemployment and sharp drops in home and investment values.
Revenue fell 3 percent to $5.57 billion, below the nearly $5.7 billion expected by Wall Street. McDonald's said it was hit by a stronger dollar in many foreign markets, including Canada, Europe, Britain and Australia.
Global same-store sales rose 7.2 percent in the quarter. Same-store sales rose 10 percent in the Asia/Pacific, Middle East and Africa markets, 7.6 percent in Europe and 5 percent in the United States.
In Europe, same-store sales rose 5.4 percent in December, compared with rates of 9.8 percent in October and 7.8 percent in November. The Asia segment had a December rise of 5.7 percent, versus 11.5 percent in October and 13.2 percent in November.
McDonald's said its U.S. business benefited from the addition of the Southern Style Chicken biscuit and sandwich, improved service at its drive-through windows, and the expansion of its high-end coffee drinks.
For 2009, McDonald's forecast capital spending of $2.1 billion, with about half of the total being invested in existing restaurants and the rest being used to open about 1,000 new restaurants.
It forecast 2009 food costs would rise 5 percent to 5.5 percent in the United States, where they rose 7 percent in 2008. As a result of easing food price inflation, it said it probably will not raise prices as much as usual in the early part of this year.
(Editing by Maureen Bavdek and John Wallace)
- Malaysia military source says missing jet veered to west |
- Ukraine appeals to West as Crimea turns to Russia |
- Malaysia air probe finds scant evidence of attack: sources |
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source
- Libyan parliament sacks PM after tanker escapes rebel-held port