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Spinoff helps McDonald's 4Q profit double

Spinoff helps McDonald's 4Q profit double

The spinoff of a burrito chain coupled with record-setting overseas sales helped McDonald's Corp. more than double its fourth-quarter profit, executives said.
McDonald's, the world's largest fast-food company, said Wednesday it will continue its push into countries such as China, Japan and Russia when it opens 800 new restaurants this year.
The expansion will net the chain a total of 400 new sites, after being offset by closures _ an 11 percent increase from the number of new restaurants opened last year.
"Our better, not just bigger, focus has transformed our business and built momentum," said Matthew Paull, McDonald's chief financial officer.
Executives at the Oak Brook, Illinois-based company said they also hope to continue the success of their popular chicken menu, launching chicken strips and snack wraps in the U.K. during the first quarter. The company also will continue its popular premium-roast coffee and is eyeing other specialty coffee drinks, premium hamburgers and breakfast burritos.
During the quarter ended Dec. 31, McDonald's earned $1.2 billion (euro0.92 billion), or $1 a share. That was up from $608.5 million, or 48 cents a share, in the same period last year.
McDonald's revenue climbed 11 percent to $5.6 billion (euro4.31 billion), from $5.01 billion during the year-ago period.
The earnings were in line with preliminary results released last week but the stock dipped from the seven-year high it posted this month after some analysts said operating profit fell short of their expectations.
Even without the gain from the spinoff of its Chipotle chain, McDonald's said income from continuing operations climbed to $761.2 million (euro585.31 million), or 61 cents a share, a 26 percent increase from $604.8 million last year.
The company said the spinoff added 39 cents per share to its results.
On average, analysts surveyed by Thomson Financial forecast quarterly income of 61 cents per share and revenue of $5.7 billion (euro4.38 billion). Those estimates typically exclude one-time items.
For the year, McDonald's said it earned $3.5 billion (euro2.69 billion), or $2.83 per share, a 36 percent increase from last year. For 2006, the company had $21.6 billion (euro16.61 billion) in revenue.
Skinner said the company will invest nearly $2 billion (euro1.54 billion) this year to open the new restaurants and improve existing locations.
About 50 of the new restaurants in China will feature drive-throughs.
"In China, our key growth market, our focus is simple _ cementing brand preference for Chinese consumers through key competitive advantages," said CEO Jim Skinner.
UBS analyst David Palmer said McDonald's had better-than-expected profit margins, which increased for the fourth consecutive quarter.
"Margin expansion should continue in 2007, and solid growth in the U.S. behind high-margin breakfast should help," he wrote in a research note published Wednesday. "We also believe European growth can remain solid."
Earlier this month, McDonald's said its European operation had its best year in nearly 15 years with a 5.8 percent comparable sales increase in 2006. For the quarter, European sales climbed 7.3 percent.
In the U.S., same-store sales, an important retail measure that compares stores open at least a year, increased 5.9 percent for the quarter.
Laurie Hahn, an analyst at Deutsche Bank Securities, said the company's new chicken snack wrap and extended hours are helping to increase the value of the McDonald's brand.
"In short, we see continued progress on strengthening brand equity," she wrote in a research note.
McDonald's said it was on track with a three-year plan to increase the number of restaurants operated as franchises. The program, announced last year, hopes to turn 2,300 company-owned restaurants _ mostly in Canada and the U.K. _ into franchises over the next two years.
Executives said they expect the company to have annual sales growth of up to 5 percent.
McDonald's shares fell 69 cents, or 1.54 percent, to close at $44.16 on the New York Stock Exchange.
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On the Net:
http://www.mcdonalds.com


Updated : 2021-06-21 12:42 GMT+08:00