Dollar gains bite into McDonald's
July 24, 2009
By Courtney Dentch New York
McDonald's second-quarter earnings fell 8.1 percent as currency translation blunted sales of Big Macs and fries outside the US, the largest restaurant company said yesterday.
The shares declined 1.4 percent to $58.02 (R452.25) in early US trade after the company reported revenue that missed analysts' estimates. Revenue fell 7 percent to $5.65 billion, the company said yesterday. The average of analysts' estimates had predicted $5.69bn.
McDonald's said currency translation trimmed profit by 9c a share in the quarter. The Dollar index, which London's ICE futures exchange uses to track the greenback against the currencies of six major US trading partners including the euro, pound and yen, rose more than 10 percent in the 12 months to June.
US sales have slowed as diners spend less. "US consumer weakness and the impact from quick-service restaurant discounting, along with continued international volatility," were hurting sales, Jeffrey Bernstein, an analyst with Barclays Capital in New York, wrote in a note. He rated the stock overweight.
Net income declined to $1.09bn from $1.19bn a year earlier, when the Illinois-based company recorded a 10c gain from the sale of its stake in UK sandwich chain Pret A Manger. - Bloomberg
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