McDonald's 4Q profit falls due to year-ago benefit
McDonald's says its profit dropped 23 percent in the fourth quarter due to a tax benefit that inflated year-ago results, but strong same-store sales helped the hamburger chain beat Wall Street expectations.
The Oak Brook-based chain said Monday its earnings fell to $985.3 million, or 87 cents per share, from $1.27 billion, or $1.06 per share.
The year-ago quarter included a tax benefit of 33 cents per share. Excluding that, the company's profit was 73 cents per share.
Analysts surveyed by Thomson Reuters expected profit of 83 cents per share on revenue of $5.70 billion.
Revenue fell 3 percent to $5.57 billion from $5.75 billion.
Global sales at stores open at least a year jumped 7.2 percent while those sales in the U.S. rose 5 percent.
McDonald's U.S. said it delivered strong results for the quarter and year by seizing opportunities in the key growth areas of chicken, breakfast, beverages and convenience. Throughout 2008, the U.S. built brand loyalty by reinforcing convenience and menu variety with the addition of the Southern Style Chicken biscuit and sandwich, drive-through enhancements to improve service and ongoing expansion of McCafe specialty coffees.
In Europe, ongoing efforts to strengthen brand relevance generated impressive fourth quarter and full year results. Full year comparable sales were positive in every European market as more customers enjoyed McDonald's combination of seasonal and premium menu selections, compelling value options and inviting restaurants.
"Through our strategic focus on menu choice, food quality and value, the average number of customers served per day increased to more than 58 million in 2008. Comparable sales and guest counts were positive across all segments for every quarter, and the company delivered double-digit growth in operating income for the fourth quarter and the year," said Chief Executive Officer Jim Skinner.
Global comparable sales increased 6.9 percent, including U.S. 4 percent, Europe 8.5 percent and Asia/Pacific, Middle East and Africa 9 percent.
Skinner added, "Our disciplined approach to financial management continues to be an important component of McDonald's success. We remain committed to enhancing shareholder value by investing capital prudently, optimizing our restaurant ownership mix and returning cash to shareholders. To date, we have returned $11.5 billion to shareholders through dividends and share repurchases toward our target of $15 billion to $17 billion for 2007 through 2009. For 2009, we plan to invest $2.1 billion of capital to open about 1,000 new McDonald's restaurants and reinvest in our existing locations."
Daily Herald business writer Kim Mikus contributed to this report.