Thursday, Food service retailer McDonald's Corp. (MCD) posted an increase in its third-quarter profit, citing positive comparable sales worldwide. Per share earnings advanced 10% from last year and topped the Street view. The fast food giant expects comparable sales to remain positive in October.
The Oak Brook, Illinois-based company's third-quarter net income advanced 6% to $1.26 billion from $1.19 billion in the prior-year quarter. On a per share basis, earnings totaled $1.15, up 10% from the previous year's $1.05.
On average, 19 analysts polled by Thomson Reuters expected the company to post earnings of $1.11 per share. Analysts' estimates typically exclude special items.
Operating income for the latest quarter was $1.93 billion, an increase from $1.82 billion in the third-quarter ended September 30, 2008.
Quarterly revenues dropped 4% to $6.05 billion from $6.27 billion reported a year ago and fell short of fifteen Wall Street analysts' consensus revenue estimate of $6.10 billion for the quarter.
Sales by company-operated restaurants totaled $4.09 billion, down 7% from $4.41 billion in the last year, while revenues from franchised restaurants grew 5% to $1.95 billion from the prior-year's $1.86 billion.
Global comparable sales rose 3.8% with 2.5% growth in the U.S., 5.8% rise in Europe and 2.2% increase in Asia/Pacific, Middle East and Africa.
For the quarter, the U.S. generated solid comparable sales and drove an operating income increase of 6%. The ongoing appeal of McDonald's core menu along with favorable consumer response to the new premium Angus Third Pounders and McCafe espresso-based coffees seasoned the U.S. results.
McDonald's Europe delivered strong third-quarter comparable sales, driving a 10% rise in operating income in constant currencies. Locally relevant premium products and promotions combined with compelling value drove the segment's quarterly performance.
In Asia/Pacific, Middle East and Africa or APMEA, operating income advanced 21% in constant currencies with Australia and China leading the segment. Consumer appeal has been driven by the emphasis on convenience, value, operations excellence and core menu driving growth across APMEA.
For the nine-month period, the world's leading hamburger chain and a Dow component reported net income of $3.334 billion or $3.00 per share, compared to $3.327 billion or $2.89 per share in the year-earlier period.
Revenues for the nine months ended September 30, 2009 were $16.8 billion, an increase of 3%, compared to $17.9 billion in the same period of last year.
Jim Skinner concluded, "We begin the fourth quarter from a position of strength, and I am confident that our focus on the customer and commitment to financial discipline will continue to deliver long-term profitable growth for our System and our shareholders."
For the month of October, despite a declining informal eating out market around the world, the company expects consolidated comparable sales to remain positive.
Among McDonald's rivals, Yum! Brands Inc. (YUM) posted third-quarter net income of $334 million or $0.69 per share, up from $282 million or $0.58 per share in the year-ago quarter, helped by strong profit growth in China and the U.S. The company sales declined 2% to $2.4 billion, while franchise and license fees and income fell 3% to $346 million.
McDonald's shares, which have been trading between $45.79 and $67.00 in the past 52 weeks, are currently trading at $59.86, up $1.53 or 2.62%.
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