July 22, 2013 / 12:56 PM / 4 years ago

CORRECTED-UPDATE 1-McDonald's says full-year results 'challenged' by flat sales

3 Min Read

(Corrects analysts' estimate in second-last paragraph to $7.09 bln from $6.91 bln)

* Second-quarter earnings per share $1.38 vs est $1.40

* Second-quarter sales rise 2 percent to $7.08 bln

* July same-restaurant sales expected to be relatively flat

* Shares down 2 percent in premarket trading

July 22 (Reuters) - McDonald's Corp warned that full-year results would be "challenged" in the face of falling sales in Europe, its biggest market, and growing competition from smaller fast-food rivals in the United States.

The world's biggest restaurant chain by revenue reported a lower-than-expected quarterly profit and said it expects global same-restaurant sales in July to be relatively flat, sending its shares down 2 percent in premarket trading.

"Based on recent sales trends, our results for the remainder of the year are expected to remain challenged," Chief Executive Don Thompson said in a statement, without stating any figures

In the second quarter ended June 30, global sales at McDonald's restaurants open at least 12 months rose 1 percent, in line with analysts' expectations.

In the U.S. market, the company is fighting to accelerate sales after smaller rivals such as Wendy's Co and Burger King Worldwide Inc rolled out attention-grabbing menu items and limited-time offers.

The company has expanded its offerings for late-night breakfasts, tweaked other menus and advertised value-priced meals to bring in more traffic.

McDonald's said second-quarter same-restaurant sales in the United States rose 1 percent, missing the average analysts' forecast of a 1.5 percent increase.

In Europe, same-restaurant sales were down 0.1 percent in the quarter - the third consecutive quarter of declining sales in the region. In the Asia/Pacific, Middle East and Africa (APMEA) region, second-quarter sales fell 0.3 percent.

Analysts polled by Consensus Metrix had forecast declines of 0.1 percent in Europe and 0.2 percent in APMEA.

McDonald's reported net income of $1.40 billion, or $1.38 per share, for the second quarter, up from $1.35 billion, or $1.32 per share, a year earlier.

Analysts on average had expected earnings of $1.40 per share in the quarter.

Sales rose 2.4 percent to $7.08 billion, missing Wall Street's expectations of $7.09 billion, according to Thomson Reuters I/B/E/S.

Shares of McDonald's were trading at $98.05 before the bell. (Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Saumyadeb Chakrabarty and Robin Paxton)

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