McDonald's Sells More, Raises Profit Outlook

McDonald's Corp. (MCD) said Wednesday it expects to earn 61 cents per share in the third quarter, helped by a lower tax rate and increased sales worldwide.

Wall Street currently is looking for a profit of 49 cents a share, according to the average analyst estimate in a survey by Thomson First Call (search).

The Oak Brook, Ill.-based fast-food giant said its preliminary third-quarter estimate reflects a tax benefit of 7 cents a share from an international transaction and other items which affect 2004 results only.

McDonald's posted a profit of $547 million, or 43 cents a share, in the third quarter of 2003, on revenue of $4.5 billion.

The company reported Wednesday that sales for all McDonald's restaurants open 13 months or more were up 7.3 percent in September and 5.8 percent for the quarter. For the year-to-date period, worldwide same-store sales were up 7.6 percent.

McDonald's reported U.S. same-store sales (search) rose 10.6 percent in September, 8.5 percent for the third quarter and 10.4 percent for the year-to-date period. The company attributed the increase in domestic same-store sales to more menu variety and value, better tasting food, more convenient hours, stronger marketing and improved service. The company noted the increase was achieved despite hurricanes and heavy rains that affected the eastern and southern U.S. over the last several months.

At European McDonald's restaurants, same-store sales were down 0.6 percent for September, but were up 0.3 percent for the quarter and 2.7 percent for the year-to-date period.

McDonald's said high unemployment and stagnant economic growth in several countries, most notably Germany, continue to hurt business. The company plans to grow its European business with better-tasting food, improved service and menu variety and value.

In the Asia-Pacific region, the Middle East and Africa, same-store sales were up 7.3 percent in September, 5.4 percent for the third quarter and 6.5 percent for the year-to-date period. Business benefited from enhancements to menu variety and value, the company said.

McDonald's said total systemwide sales increased 11.4 percent in September and 10.1 percent for the third quarter, or 8.1 percent and 6.6 percent, respectively, in constant currencies. Systemwide sales were up 12.8 percent, or 8.4 percent in constant currencies, for the year-to-date period.

The company is set to report third-quarter earnings before the market opens on October 19.