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McDonald's profit slips
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July 24, 2001: 12:01 p.m. ET
Fast-food chain cites strong dollar, mad cow fears; meets lower 2Q target
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NEW YORK (CNNfn) - Fast-food leader McDonald's Corp. said concerns about mad cow disease in Europe took a bite out of its second-quarter profits as it met lowered forecasts for the period.
The hamburger chain posted net income of $440.9 million, or 34 cents a share, down from $525.9 million, or 39 cents a share, a year earlier. The company warned June 15 that its earnings per share would fall to 34 or 35 cents. Analysts surveyed by earnings tracker First Call had forecast earnings per share of 38 cents before that warning, and lowered their consensus forecast to 34 cents afterward.
Revenue remained essentially flat at $10.2 billion.
The company has struggled in the last year as concerns about mad cow disease have hurt U.S. sales, but said it was encouraged by a slight pickup in European sales before the negative effects of currency transactions.
European sales decreased 2 percent to $2.3 billion in the quarter after the effects of negative currency transactions due to the strong dollar. Excluding currency effects, sales increased 3 percent.
U.S. sales were flat at $5.2 billion
McDonald's (MCD: up $0.43 to $28.20, Research, Estimates) also said it faced tough sales comparisons in the United States due to last year's Teenie Beanie Babies promotion, which it said was the fourth most successful campaign in the company's history.
The company also said its Asia/Pacific segment posted a 4 percent sales decline after the effects of currency, but a 9 percent increase excluding currency. An initial public offering of McDonald's Japan is set for Thursday.
McDonald's also said operating margins improved in the quarter thanks to declining food and paper costs while occupancy and other operating expenses remained flat.
"While this has been a tough six months, we are intent upon improving the business by building comparable sales around the world through improved operations, effective marketing and menu development," CEO Jack Greenberg said.
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The company said it continues to focus on cutting costs and that it is mulling closing 250 underperforming restaurants located mainly in emerging markets.
McDonald's said it remains confident of meeting full-year expectations for flat earnings per share, and expects to post "significantly stronger" results in the second half than in the first. 
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McDonald's
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