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McDonald's Q1 Profit Rises On Broad-based Sales Growth


McDonald's Corp. (MCD) on Friday reported a 5 percent increase in profit for the first quarter, reflecting broad-based sales growth across all geographic segments. Earnings per share matched analysts' expectations.

The fast food giant's global comparable sales - a metric used to gauge performance of restaurants open for at least one year - increased 7.3 percent, benefiting from one additional day due to leap year.

Looking ahead, the hamburger chain projects April comparable sales to increase about 4 percent.

The Oak Brook, Illinois-based company has of late been focusing on enhancing restaurant experience by modernizing them to match up with upscale fast food joints such as Chipotle and Panera.

The company's success also lies in its readiness to adapt or adjust menu to fall in line with healthier appetites of customers, while also making creative and affordable menu options.

In the U.S., McDonald's comparable sales in the latest quarter rose 8.9 percent. Top-line performance benefited from the popularity of McDonald's classic core favorites, menu innovations such as Chicken McBites, reimaged restaurants and favorable weather. U.S. operating income for the quarter rose 10 percent.

Europe comparable sales were up 5 percent and Asia/Pacific, Middle East and Africa, or APMEA, region comparable sales were up 5.5 percent.

Europe's bottom line increased led by robust performance in the U.K. and Russia, with France and Germany also contributing. However, ongoing economic challenges and severe weather in February negatively impacted the quarter.

APMEA region's operating income growth reflected broad-based growth led by China, Australia and Japan.

McDonald's net income for the first quarter was $1.27 billion or $1.23 per share, up from $1.21 billion or $1.15 per share in the prior-year quarter.

The earnings matched the estimate of 26 analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.

Total revenue for the quarter grew 7 percent to $6.55 billion from $6.11 billion in the same period last year. Analysts had a consensus estimate of $6.54 billion. Excluding currency translation impact, revenues for the quarter increased 8 percent.

Sales from company-operated restaurants rose 7 percent from last year to $4.43 billion, while revenues from franchised restaurants increased 8 percent to $2.11 billion.

McDonald's said in mid-March that Chief Executive Officer Jim Skinner is set to retire end June, after serving the company for 41 years and as CEO since November 2004. He will be succeeded by President and Chief Operating Officer Don Thompson.

MCD closed Thursday's trading at $95.28, down $2.06 on a volume of 13.94 million shares. In Friday's pre-market, the stock is adding $1.64 or 1.72 percent to $96.92.

by RTTNews Staff Writer

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