Friday, October 21, 2011

McDonald's profit, Sept. sales beat expectations

NEW YORK: McDonald's Corp reported a higher-than-expected quarterly profit after new menu items and renovations helped lift sales at established restaurants around the world in September, and its shares rose nearly 3 percent on Friday, Oct 21.

The world's biggest restaurant company has been benefiting from improving food quality and selection, and taking market share from rivals.

By adding Dollar Menu items and introducing high-margin beverages such as coffee and fruit smoothies, McDonald's has broadened its appeal beyond the young men who account for the biggest share of sales at most other fast-food chains.

The company also is modernizing restaurants in Europe and the United States, which is boosting sales and making operations more efficient.

Sales at established restaurants rose 6.6 percent in September, while analysts on average expected a 3.6 percent increase.

U.S. same-restaurant sales rose 5 percent, while Europe was up 6.9 percent and Asia/Pacific, Middle East and Africa had a 6.8 percent increase.

Strong results from Europe, especially Germany, helped allay fears that austerity measures would pummel demand in the region, said Lazard Capital Markets analyst Matthew DiFrisco.

McDonald's "continues to evolve into more of a staple than a discretionary brand," said DiFrisco, who added that the company also turned in solid results from the United States.

Third-quarter net income rose to $1.51 billion, or $1.45 per share, from $1.39 billion, or $1.29 per share, a year earlier.

Analysts on average forecast $1.43 a share, according to Thomson Reuters I/B/E/S.

Earnings per share rose more than 12 percent, but were up only about 6 percent excluding foreign currency benefits.

Revenue rose 13.8 percent to $7.17 billion during the quarter. Sales at established restaurants were up 5 percent globally, with increases of 4.4 percent in the United States, 4.9 percent in Europe and 3.4 percent in the Asia/Pacific, Middle East and Africa region.

The company forecast a 4 percent to 5 percent increase in sales at established restaurants in October.

DiFrisco said the company nudged up its forecast for food and other costs, but added that this was no cause for concern.

"They are managing their costs and margins in an environment where commodity costs are still heady," he said.

McDonald's shares were up 2.8 percent at $91.53 in early trading on the New York Stock exchange. - Bernama

No comments:

Post a Comment