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McDonald’s Forecasts Gains in 2Q

June 17, 2002

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OAK BROOK, Ill. (AP) _ Boosted by increased sales in Europe, McDonald’s Corp. said Monday that earnings for the second quarter should rise, reversing a trend that has seen earnings for the fast food giant drop for six straight quarters.

Second quarter earnings per share should be 38 cents to 39 cents, compared with 34 cents in 2001, the company said. That’s slightly above the consensus estimate of analysts surveyed by Thomson Financial/First Call, who predicted second quarter earnings of 37 cents per share.

McDonald’s had seen earnings drop over the past several quarters because of the sluggish global economy and a mad-cow scare that hurt sales in Japan and Europe.

While sales in the company’s Asia/Pacific/Middle East/Africa segment continued to slump, McDonald’s has seen a rebound in Europe. In constant currencies, European sales increased 9 percent for the first two months of the second quarter and 10 percent through year-to-date May compared with the same periods last year.

In the United States, sales grew 1 percent for the first two months of the second quarter and 2 percent through year-to-date May. For the second quarter and for the year, McDonald’s expects U.S. sales to increase in low-single digits.

Concerns about the safety of beef in Japan continue to affect sales in that country. Japanese consumers have been leery of beef since an outbreak last year of mad cow disease, although McDonald’s stressed that its restaurants in Japan use beef only from Australia and New Zealand.

Systemwide sales for the first two months of second quarter 2002 were $6.9 billion, up 1 percent over the same period last year in constant currencies. Through year-to-date May, systemwide sales were $16.6 billion, up 3 percent. The company said it expects systemwide sales to increase in mid-single digits for the year.

For the year, McDonald’s expects annual earnings per share to be in the range of $1.47 to $1.52, excluding charges in the first quarter. Including the charges, the company expects annual earnings per share to be $1.36 to $1.41.

Shares in the Oak Brook, Ill.-based company, which has more than 30,000 restaurants in 121 countries, rose 70 cents to $29.82 Monday on the New York Stock Exchange.


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