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McDonald's 4Q profit falls due to year-ago benefit
2009-01-26
NEW YORK - A tax benefit last year led McDonald's Corp. to report a 23 percent drop in its fourth-quarter profit Monday, but strong same-store sales helped the hamburger chain beat Wall Street's expectations. The Oak Brook, Ill.-based chain said its net income for the quarter ended Dec. 31 fell to $985.3 million, or 87 cents per share, from $1.27 billion, or $1.06 per share, a year ago. The year-earlier quarter included a tax benefit of 33 cents per share. Excluding that, the company's profit was 73 cents per share in that quarter. Analysts surveyed by Thomson Reuters expected profit of 83 cents per share on revenue of $5.70 billion. Despite high ingredient costs, the company reported an 8 percent decline in total operating costs and expenses. High prices for beef, cheese and other ingredients contributed to its decision to raise the price of its popular Double Cheeseburger in November and replace the sandwich on the Dollar Menu with a new double burger that has one slice of cheese instead of two. Revenue fell 3 percent to $5.57 billion from $5.75 billion due to the impact of a stronger dollar. Companies typically convert foreign currencies into dollars. Same-store sales, or sales at stores open at least a year, jumped worldwide and in the U.S., where most restaurant chains have experienced slower sales as more consumers cut back on eating out. McDonald's has fared well despite the dismal economic environment, largely due to its low prices and the reach of the chain's ubiquitous Golden Arches. The company has also worked for years to improve the quality of its food and has added a number of new products in the past year, including fried chicken biscuits and sandwiches and espresso-based coffee drinks. In the quarter, global sales at stores open at least a year jumped 7.2 percent, while same-store sales in the U.S. rose 5 percent. International same-store sales were also strong, rising 7.6 percent in Europe and 10 percent in the Asia/Pacific, Middle East and Africa division. For the year, net income soared 80 percent to $4.31 billion, or $3.76 per share, from $2.40 billion, or $1.98 per share in the prior year. Revenue climbed 3 percent to $23.52 billion from $22.79 billion. Shares dipped 72 cents to $57.30 in electronic pre-market trading. The stock closed at $58.02 Friday.
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