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McDonald's 1Q profit rises on value menu items

business Updated: Apr 21, 2010 19:04 IST

McDonald's Corporation said its first-quarter profit climbed above analysts' expectations on Wednesday as hungry diners looking to stretch their dollars chowed down on its value menu items.

The world's largest hamburger chain said sales rose across all its markets, especially Europe and Asia, as more customers visited its restaurants. The company's US sales rose as well, though more slowly than elsewhere.

McDonald's, based in Oak Brook, Illinois, generally outperformed most competitors in the recession. But even its long run of sales growth has come under pressure amid high unemployment.

The fast-food operator earned USD 1.09 billion, or USD 1 per share. That compares with earnings of USD 979.5 million, or 87 cents per share, in the same quarter last year.

Revenue for the period ended March 31 rose 10 per cent to USD 5.61 billion, an encouraging sign, as the chain's revenue dropped in four of the past five quarters as consumers dealt with high unemployment.

The performance was better than Wall Street predicted, as analysts surveyed by Thomson Reuters had forecast a first-quarter profit of 96 cents per share on revenue of USD 5.52 billion.

Customers snapped up McDonald's drinks such as frappes and beverages from its McCafe line. Its new breakfast dollar menu also resonated with consumers as they sought out fast and cheap meals to start off their day.

A key US sales figure also rose, with sales at domestic restaurants open at least a year up 1.5 per cent during the quarter. This figure is a key indicator of a restaurant operator's health because it measures results at existing restaurants rather than newly opened ones.

Worldwide sales at restaurants open at least a year grew 4.2 per cent, with Europe climbing 5.2 per cent and Asia/Pacific, the Middle East and Africa up 5.7 per cent.

Looking ahead, Skinner said McDonald's global sales at stores open at least a year are "at least as strong" as its first-quarter results.