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McDonald's sees gains
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December 14, 2001: 2:49 p.m. ET
Restaurant chain guides higher for 2002 due to improving European sales.
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NEW YORK (CNN/Money) - Investors picked up shares of McDonald's Corp. Friday after the world's largest restaurant chain said it expects 2001 earnings to meet estimates and profits in 2002 to be in the upper range of estimates as business trends improve in Europe and the United States.
McDonald's (MCD: up $1.14 to $26.78, Research, Estimates) shares rose 4.6 percent after the company said it sees an operating profit in 2001 of $1.38 per share. John Glass, restaurant analyst at Deutsche Banc Alex. Brown, said that estimate includes a 2-cent gain from the company's initial public offering in Japan. Excluding the gain, the view is in line with the mean Wall Street estimate of $1.36 per share, according to First Call. The earnings tracker shows 15 analysts have estimates ranging from $1.35 to $1.39 a share for 2001.
The company expects earnings in fiscal year 2002 of $1.47 to $1.54 per share, 5 percent to10 percent above 2001 and in the upper end of analysts' estimates of $1.45 to $1.57 per share.
McDonald's did say it expects fourth-quarter earnings of 34 cents per share, a penny shy of estimates, due to weak Asian markets and a scare of mad cow disease in Japan.
The downward guidance for the fourth quarter did little to sway investors Friday, as many were anticipating worse. "It's a relief rally," said Glass.
"This year has been challenging for McDonald's," said McDonald's Chairman and Chief Executive Jack Greenberg. "But I am confident that our strategies are right and we will see significant improvement in 2002, setting the stage for stronger growth in 2003 and beyond."
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To quell the mad cow disease scare, the Oak Wood, Ill.-based company said it is advertising that it does not use Japanese beef in restaurants based in Japan, where three cows have tested positive for the degenerative brain condition since September.
The company said European sales grew 8 percent in the first two months of the fourth quarter and U.S. revenues are up 2 percent.
-from staff and wire reports 
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