McDonald's Q3 sizzles on 42% profit jump :: Restaurant Supply Resource

McDonald's Q3 sizzles on 42% profit jump

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McDonald's Third Quarter EPS Rises 42% to New Record

McDonald's Corporation (NYSE: MCD) today announced strong operating results for the third quarter and nine months ended September 30, 2004. The company reported diluted earnings per share of $0.61, up 42% for the quarter and $1.48, up 37% for the nine months driven by robust U.S. performance. In both periods, earnings per share included a $0.07 per share tax benefit. The Company reported the following highlights for the quarter:

- Revenues increased 9% (6% in constant currencies) to $4.9 billion and comparable sales increased 5.8% for the quarter.
- Margins for the quarter increased 40 basis points for both Company-operated and franchised restaurants.
- Operating income increased 14% (10% in constant currencies) to $1.1 billion.
- Diluted earnings per share increased 42% (37% in constant currencies) to $0.61 compared with $0.43 for third quarter 2003.

President and Chief Executive Officer Charlie Bell said, "McDonald's Plan to Win and our focus on quality food, menu variety, compelling marketing, and outstanding customer service continue to drive global performance. For the third consecutive quarter, we increased customer visits, improved margins and delivered double-digit growth in earnings.

"McDonald's U.S. results were strong, especially in the face of increasingly difficult year-over-year comparisons. U.S. operating income exceeded $1.7 billion for the first nine months, and was more than $600 million for the third quarter. In addition, our U.S. business has now posted impressive comparable sales along with meaningful margin expansion for six consecutive quarters. Our sustained performance clearly indicates that our Plan to Win is delivering, with multiple integrated initiatives including relevant food and value offerings and added conveniences like extended hours and cashless payment options.

"In Europe, operating income for the nine months exceeded $1.1 billion, and was more than $400 million for the third quarter. However, high unemployment and low consumer confidence in Germany continue to impact our growth. We are leveraging the strengths of our everyday value offerings to attract more customers in this challenging economic environment. In the U.K., we are starting to make progress renewing consumer excitement in our Brand with enhanced food taste and variety and improved service. I am confident that we have the initiatives in place to optimize the long-term performance of this critical business segment.

"Operating income for McDonald's Asia/Pacific, Middle East and Africa segment exceeded $250 million for the first nine months, and was nearly $100 million for the third quarter. Comparable sales trends were strong, driven by efforts in Japan, Australia and China to distinguish our Brand through added value and menu variety.

"We continue to exercise strong financial discipline by managing costs and using our significant and growing cash flow to invest in the business and strengthen our balance sheet. In addition, we expect to return at least $1.3 billion to shareholders through share repurchase and dividends in 2004.

"From a financial perspective, 2004 is shaping up to be a good year for McDonald's. We have fortified our foundation and positioned McDonald's for future growth. As we move forward, we will intensify our efforts around the Plan to Win and our strategy to be better, not just bigger. Despite our success, we are not satisfied. There is still much work to be done. We will stay focused on enhancing every element of the McDonald's Brand experience as we strive to become our customers' favorite place and way to eat."

KEY HIGHLIGHTS - - CONSOLIDATED
Dollars in millions, except per common share data

-------------------------------------------------------------------------
% Increase
Currency Excluding
Quarters ended Translation Currency
September 30, 2004 2003 % Inc Benefit Translation
-------------------------------------------------------------------------
Revenues $ 4,925.7 $ 4,504.6 9 $170.3 6
Operating income 1,098.9 963.9 14 42.5 10
Net income 778.4 547.4 42 24.7 38
Net income
per common share-diluted 0.61 0.43 42 0.02 37

-------------------------------------------------------------------------
Nine months ended
September 30,
-------------------------------------------------------------------------
Revenues $14,054.4 $12,585.1 12 $593.7 7
Operating income 2,923.2 2,464.7 19 133.1 13
Income before
cumulative effect
of accounting change 1,880.6 1,382.5 36 69.0 31
Net income 1,880.6 1,345.7 40 69.0 35
Per common share-diluted:
Income before
cumulative effect
of accounting change 1.48 1.08 37 0.05 32
Net income 1.48 1.05 41 0.05 36

THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS
RELEASE
- Constant currency results are calculated by translating current year
results at prior year average exchange rates.
- Comparable Sales represent sales at Systemwide restaurants in operation
at least thirteen months, excluding the impact of currency translation.

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Date Listed: 2004-10-19

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Industry: Restaurants
Category: Financial
McDonalds
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