McDonald's second quarter profit falls 8 percent on strong dollar
NEW YORK -- McDonald's Corp. said today the stronger dollar and a gain that boosted results a year ago led its second-quarter profit to dip 8 percent.
The dip was expected since the company had predicted a hit to profit from exchange rates earlier this year. Excluding that and the gain a year ago, operating income rose and sales at established locations continued to grow despite as consumers continued to turn to fast food to save cash.
Still, shares fell 75 cents, or 1.3 percent, to $58.07 in electronic before-market trading.
The Oak Brook, Ill.-based fast-food chain said net income fell to $1.09 billion, or 98 cents per share, from $1.19 billion, or $1.04 per share in last year's quarter.
Excluding a 10-cent-per-share gain a year ago from the sale of McDonald's minority interest in Pret A Manger, the company earned 94 cents per share in the 2008 quarter.
Analysts polled by Thomson Reuters expected profit of 97 cents per share. Analysts typically exclude special items.
Same-store sales, or sales at locations open at least a year, rose 4.8 percent globally and 3.5 percent in the U.S. The nation's No. 1 hamburger chain said it gained market share in the U.S. by focusing on "classic menu favorites" like the Big Mac and the heavily promoted national launch of a new line of espresso-based drinks in its McCafe lineup. The drinks are being rolled out to all 14,000 of the company's U.S. locations.
Revenue fell 7 percent to $5.65 billion because of the effect of translating foreign currency into dollars.
Most U.S. companies that sell goods internationally convert those sales from foreign currencies into dollars when they report their financial results. If the dollar is stronger than those currencies, the translation results in fewer dollars in revenue.
The company said earlier this year it expected both second and third quarter profit to take an 11-cent-per-share hit from exchange rates.
Analysts predicted revenue of $5.72 billion.