1st-Quarter Profit Climbs 5.1% at McDonald’s
McDonald’s Corp. said Friday that first-quarter earnings rose 5.1%, as the world’s largest fast-food chain benefited from its expansion overseas even as profit margins narrowed.
As expected, net income rose to $362.2 million, or 52 cents a diluted share, from $344.5 million, or 48 cents, a year ago. Revenue rose 7% to $2.80 billion, from $2.62 billion, as it added 214 restaurants outside the U.S. during the quarter.
The company is focusing on overseas after U.S. franchise owners complained that new stores were hurting their restaurants. In the quarter, sales at international restaurants rose 5.5%, while U.S. sales rose 3%. To boost margins as U.S. sales slow, McDonald’s has said it plans to cut jobs and costs.
“It was probably the most difficult quarter of the year, and it came in with no surprises,” said Scott Swanson, a senior analyst with Pasadena-based Roger Engemann & Associates.
Shares of Oak Brook, Ill.-based McDonald’s rose 19 cents to close at $61.81 on the New York Stock Exchange.
McDonald’s said profit margins at company-operated stores decreased slightly for the quarter because of higher occupancy and other costs related to maintaining its restaurants.
Margins for company-operated restaurants in the U.S. widened to 16.4% from 16%. For company restaurants outside the U.S., margins narrowed to 17.9% from 18.4%.
The company is preparing to fight flagging U.S. sales with a new cooking system. It previously announced plans to take a second-quarter charge.
At a Glance:
* Caterpillar Inc. said its first-quarter earnings rose 9% because of the booming U.S. construction market. The earth-moving equipment maker earned $430 million, or $1.15 per share on a diluted basis, up from $394 million, or $1.04 per share, in the year-ago period, beating expectations. Sales rose 12% to $4.79 billion, from $4.26 billion. Caterpillar said U.S. sales rose to $2.44 billion, while international sales were $2.13 billion.
* Clorox Co. said its fiscal third-quarter profit rose 16%, in line with expectations, on increased revenue from its Brita water filters and home-cleaning products such as Pine-Sol. Net income rose to $75.9 million, or 72 cents a diluted share, from $65.6 million, or 62 cents. * Dole Food Co. said first-quarter earnings fell 46%, blaming El Nino for causing larger supplies of bananas and lower prices. The world’s largest marketer of fresh produce said net income fell to $22.8 million, or 37 cents a diluted share, from $42 million, or 70 cents, a year earlier. The Westlake Village-based company exceeded by a penny the average estimate of analysts.