McRib, coffee help boost McDonald's 4Q earnings

McDonald's Corp., the world's biggest restaurant chain, reported a 2.1 percent gain in fourth- quarter profit as new menu items attracted diners, offsetting slower-than-estimated December sales because of snowstorms.

Net income rose to $1.24 billion, or $1.16 a share, the Oak Brook-based company said today in a statement. In the U.S., same-store sales advanced 2.6 percent last month, compared with a 4 percent average of five analysts' estimates compiled by Bloomberg.

December sales in the U.S. were hurt by inclement weather, the retailer said, damping demand for frappes and the new Angus snack wraps that drew customers during non-meal times in the previous months.

“The results are not as impressive as a lot of people have been used to,” said Larry Miller, an analyst at RBC Capital Markets in Atlanta who rates the stock “outperform.” “We knew that weather was hurting them.”

McDonald's rose 5 cents to $75.06 at 12:03 p.m. in New York Stock Exchange composite trading, after dropping as low as $74.15. Before today, the shares had declined 2.3 percent this year.

Excluding income related to a license transaction in Latin America, fourth-quarter profit was $1.15 a share. Analysts estimated $1.16, on average. Revenue increased 4 percent to $6.21 billion, matching the average projection. Net income was $1.22 billion, or $1.11 a share, in the year-earlier period.

McDonald's, which has more than 32,000 locations worldwide, also added smoothies to its menu to lure customers. In January Chief Executive Officer Jim Skinner started selling oatmeal in the U.S., a nation that accounts for one-third of sales.

Sales at stores open more than 13 months rose 3.7 percent globally last month, compared with a 4 percent average analysts' estimate. McDonald's said it expects comparable-store sales to increase as much as 5 percent in January.

McDonald's will probably increase prices this year to offset rising ingredients costs, Chief Financial Officer Peter Bensen said on a conference call with analysts. Meat prices may climb as much as 3.5 percent this year, according to the U.S. Department of Agriculture.

Last month, snowstorms pummeled the East Coast, dumping as much as 20 inches (51 centimeters) of snow on parts of New York City, and keeping customers at home.

Some of McDonald's fast-food rivals are unloading brands to focus on their most successful businesses. Last week Yum! Brands Inc. said it plans to sell the Long John Silver's and A&W All American Food restaurants to focus on other chains such as KFC and Taco Bell. Wendy's/Arby's Group Inc., the third-biggest U.S. hamburger chain, also said last week that it will seek a buyer for the Arby's sandwich restaurants.