McDonald’s 1st-Quarter Net Income Up 12%
McDonald’s Corp. on Thursday reported a 12% increase in first-quarter earnings, led by sales and profit gains in the U.S. and Europe, its two biggest markets.
The world’s largest restaurant chain said net income rose to $450.9 million, or 33 cents a share, from $402.7 million, or 29 cents, a year ago, the company said. Analysts were expecting 32 cents, according to First Call/Thomson Financial. Sales grew 10% to $3.34 billion.
McDonald’s shares rose $2.75, or 8%, to close at $35.81 on the New York Stock Exchange. The stock has tumbled about 11% this year. The company also said it will boost its stock buyback program by $1 billion, or 22%.
McDonald’s gets about 80% of its profit from Europe and the U.S., where it attracted customers with its new “Made-for-You” cooking system, which makes food fresher and hotter, and new products such as the McFlurry ice cream drink. Sales also rose in China and in Hong Kong, boosted by a popular promotion tied to Hello Kitty toys, analysts said.
“The sales growth was some of the best we’ve seen in the U.S., Asia and Europe,” said Rose Papp, partner and portfolio manager at Phoenix-based L. Roy Papp & Associates, which owns more than 1 million McDonald’s shares.
At a Glance
Other earnings, excluding one-time gains or charges unless noted:
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AIRLINES:
* AMR Corp., parent of American Airlines, reported first-quarter profit of $89 million, or 57 cents a share, contrasted with a loss of $2 million, or 1 cent, as it recovered from a pilots’ work stoppage a year ago. Revenue rose 14% to $4.58 billion. The results exceeded a 40-cent average estimate from analysts despite a 58% jump in fuel costs.
* Continental Airlines Inc. said first-quarter profit plunged 65% to $14 million, or 21 cents a share, as its fuel costs more than doubled. Analysts expected the airline to break even. Revenue rose 12% to $2.28 billion as the carrier added flights and raised fares.
* Northwest Airlines Corp.’s loss from operations narrowed to $41 million, or 51 cents a share, from $46.3 million, or 58 cents. Analysts expected a much deeper loss of 71 cents. Revenue grew 13% to $2.57 billion as the carrier raised fares.
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OTHER INDUSTRIES:
* Baxter International Inc. said first-quarter profit from continuing operations rose 18% to $191 million, or 65 cents a share, a penny better than forecasts, driven in part by immune globulin products and electronic infusion pumps. Sales rose 8.2% to $1.58 billion.
* BellSouth Corp. said first-quarter earnings rose 9.6% to $981 million, or 52 cents a share, a penny better than estimates, on increased revenue in its wireless and data services businesses. Revenue rose 8.6% to $6.49 billion from $5.97 billion.
* Gillette Co. said first-quarter earnings fell 4.1% to $258 million, or 24 cents a share, but beat forecasts of 22 cents. Sales rose 5.5% to $2.05 billion, much faster growth than the 2% rise analysts expected. Gillette’s razor business and Braun small-appliances businesses posted healthy profit and sales gains, but profit in the Duracell battery unit plunged 33%, far worse than analysts expected, as sales declined 2%.
* Grubb & Ellis Co. reported fiscal third-quarter profit of $2.7 million, or 13 cents a share, a turnaround from the year-ago loss of $2.4 million, or 12 cents, as the commercial property broker’s service fees rose. Revenue jumped 56% to $93.6 million.
* Polaroid Corp.’s first-quarter loss narrowed to $5.9 million, or 13 cents a share, as sales rose 6.4% to $403.4 million.
* Silicon Graphics Inc. said its fiscal third-quarter loss from operations narrowed to $16 million, or 9 cents a share, from $40 million, or 21 cents. Sales fell 9% to $563.7 million on the delayed introduction of new processors. Analysts expected a loss of 7 cents.
* TRW Inc. said first-quarter earnings rose 46% to $152.1 million, or $1.22 a share, paced by auto parts sales, including products added in last year’s acquisition of LucasVarity. Revenue jumped 47% to $4.6 billion. Profit was a penny above the revised $1.21-a-share average estimate of analysts surveyed by First Call/Thomson Financial. Analysts cut their estimates to a range of $1.20 to $1.25 a share after TRW warned three weeks ago that earnings would be at the low end of estimates.
* Union Pacific Corp., owner of the largest U.S. railroad, said first-quarter earnings rose a better-than-expected 43% to $185 million, or 74 cents a share, on higher automobile shipments. Revenue rose 6.3% to $2.91 billion. Analysts had forecast profit of 70 cents. Profit in the Overnite Transportation Co. trucking unit, where Teamsters began a strike Oct. 24, dropped 95% to $532,000 on a 6.4% increase in revenue.
* United Parcel Service Inc.’s first-quarter profit rose 35% to $674 million, or 56 cents a share, as the company shipped more packages and gained overnight shipments at the expense of rival FedEx Corp. Revenue increased 14% to $7.22 billion. UPS raised rates as much as 3.5% effective Feb. 7 to make up for rising jet fuel and diesel prices.
* Wells Fargo & Co. said first-quarter profit rose 14% to $1.01 billion, or 61 cents a share, a penny better than forecasts, from selling more products, venture capital gains and adding territories with its recent acquisitions. Net interest income rose 8%, and non-interest income was up 10%.
* Xilinx Inc. said fiscal fourth-quarter profit doubled to $78.3 million, or 22 cents a share, from $39.3 million, or a split-adjusted 12 cents, as revenue jumped 66% to $306.6 million. Profit beat estimates by a penny.
