NEW YORK (CNN/Money) -
McDonald's Corp. lowered first-quarter and full-year earnings guidance Friday, hurt by currencies overseas, store closings in Turkey and concerns about tainted beef in Asia.
The world's largest restaurant chain said it expects earnings of 29 cents to 30 cents a share for the quarter, below Wall Street forecasts of 31 cents a share, according to earnings tracker First Call. Full-year earnings are forecast at the low end of its own previous forecasts of $1.47 to $1.54 a share, McDonald's said. Analysts are projecting $1.49 a share for the year, according to First Call.
McDonald's (MCD: down $0.40 to $28.30, Research, Estimates) stock, one of the 30 in the Dow industrials, slipped nearly 2 percent in Friday afternoon trading.
Company officials told analysts on a conference call Friday that "speed of service" is emerging as the leading quality problem in U.S. restaurants.
On Jan. 24, McDonald's reported a slightly lower fourth-quarter profit that met expectations and reiterated its full-year forecast.
In addition to the adverse effects of currency translation and beef safety fears, the company will also take a $45 million non-cash charge in the quarter related to certain assets in Latin America and the closing of 32 restaurants in Turkey. The Oak Brook, Ill.-based chain also expects a $100 million non-cash charge in the quarter related to an accounting change.
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The company said it expects improvement in Asia during the second half of 2002 if consumer concerns about Mad Cow Disease ease, and the business faces easier comparisons with a year earlier. It also does not expect charges related to higher year-over-year restaurant closings in that region, officials said on the conference call.
McDonald's said systemwide sales for the first two months of 2002 rose 3 percent from a year earlier, to $6.2 billion excluding the impact of currency transactions. CEO Jack Greenberg said the company expects a 6 percent to 7 percent sales increase for the year, excluding currency impacts.
U.S. and European sales also increased in the first two months of the year, the company said. U.S. sales are expected to increase in the low-single digits for the first quarter, and mid-single digits for the year.
McDonald's expects first-quarter U.S. operating income to decline in the low- to mid-single digits, reflecting $22 million in payments to owner/operators to launch a new service system. Excluding the payments, U.S. operating income will post a low-single-digit increase for the quarter, the company said.
The company, which operates 30,000 restaurants in 121 countries, still anticipates opening 1,300-to-1,400 net units this year.
--From staff and wire reports
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