McDonald's stock falls on March sales numbers

CHICAGO: Strong international sales helped McDonald's Corp post a 24 percent gain in first-quarter profit, but investors seemed nervous about the company's first monthly decline of US same-store sales in five years.

The fast food behemoth easily topped Wall Street forecasts Tuesday when executives said it earned $946.1 million (euro593.87 million), or 81 cents per share, during the January-to-March period. That's up from $762.4 million (euro478.56 million), or 62 cents per share, during the same period last year.

Revenue climbed 6 percent to $5.6 billion (euro3.52 billion). "I'm confident our global momentum will continue,'' said Chief Executive Jim Skinner.

Analysts surveyed by Thomson Financial expected a quarterly profit of 70 cents per share on revenue of $5.4 billion (euro3.39 billion).

But a 0.8 percent dip in US comparable store figures for March, an important metric for retailers, kept McDonald's stock from rising Tuesday, despite assurances from the fast-food chain that same-store sales were on track to rebound in April.

"As we've seen before, we believe our US business is not recession-proof, but it is recession resistant," Skinner said. "That's why we are confident in our ability to manage through these economic times."

Investors said they were pleased with the company's performance, particularly amid a gloomy environment for food companies struggling with rising food prices, but said they expected short-term focus to be on US comparable sales.

"Aside from this data point, overall business momentum appears very strong as (McDonald's) continues to flex its global strength and capital muscle," Goldman Sachs analyst Steven T Kron wrote to investors a research note.

Overall, US same-store sales grew 2.9 percent during the quarter that ended March 31, while increasing more than 11 percent in Europe and 9.4 percent in Asia and the Middle East.

Revenue grew 3 percent in the US to $1.9 billion (euro1.19 billion) while operating profit climbed 5 percent to $682.5 million (euro428.41 million). European revenue climbed 23 percent to nearly $2.4 billion (euro1.51 billion) while, quarterly revenue in Asia, the Middle East and Africa grew 24 percent to about $1 billion (euro0.63 billion). Both geographic regions operating profit growth of more than 45 percent.

"The bottom line here is that (McDonald's) continues to perform very well in a challenging environment and continues to benefit from a balanced portfolio of global assets that generate tremendous cash flow," Deutsche Bank analyst Jason West wrote to investors in a research note.

Meanwhile, the company said it planned to open 1,000 new stores worldwide this coming year and was progressing with its massive rollout of a specialty coffee program in the US So far, McDonald's lattes, mochas and other espresso-drinks are now available in 1,300 US stores.

McDonald's shares fell 80 cents, or 1.4 percent, to $57.87 (euro36.33) in midday trading on Tuesday.