McDonald's Corp. said on Thursday that its fourth-quarter net income had fallen 40 per cent, its fifth straight quarterly decline, as the fast-food giant took charges for U.S. restructuring and faced declining sales in Latin America and Asia.
Net earnings at the world's largest restaurant company fell to $271.9 million (€309.5m), or 21 cents a share, from $452.0 million (€ 514m), or 34 cents, a year earlier. Before charges, the company said its per-share earnings were flat at 34 cents, in line with Wall Street expectations.
Systemwide sales, which include those of company-operated and franchised stores, rose to $10.11 billion (€11.5bn) from $9.92 billion (€11.3bn) a year earlier. Income from operations fell 38 percent to $482.7 million (€ 549.4m) from $774.0 million (€880.9m).
"It looks like things came in pretty much as expected," said Salomon Smith Barney restaurant analyst Mark Kalinowski, who rates the shares as "neutral."
He added, however, that per-share earnings before items were "slightly disappointing," since he had expected that some recovery in Europe and better December weather in the United States would help lift sales.
McDonald's, which leads the fast-food market ahead of KFC chicken parent Tricon Global Restaurants Inc. and Burger King Corp., was expected to earn between 34 cents and 36 cents a share in the quarter, with a consensus at 34 cents, according to Thomson Financial/First Call. The company forecast last month that it expected to earn 34 cents a share in the quarter, excluding one-time items, the same as a year earlier.
Sales in the United States rose 3 per cent in the fourth quarter to $4.98 billion (€5.67bn). Sales in Europe showed recovery from the effects of the food safety scare surrounding the animal disorder mad cow disease, rising 10 per cent to $2.4 billion (€2.73bn). Latin America sales, hurt by weak economies, fell 12 per cent, while those in Asia fell 10 per cent.
Shares of McDonald's have lost 11 per cent of their value in the past 12 months, but have outpaced the broad Standard & Poor's 500 Index by 7.5 per cent. The shares slipped 28 cents to $27.12 in early dealings on Thursday on the New York Stock Exchange.
Earnings in the fourth quarter included a $136.1 million (€154.9m) after-tax charge related to U.S. restructuring and a $30.6 million (€34.8m) after-tax charge related to the sale of McDonald's Aroma Cafe coffee houses, and costs associated with fraud connected to a Monopoly game promotion last year. The company also had after-tax charges of $4.8 million (€5.46m) related to the closing of nine restaurants.