The New York Times-20080129-McDonald-s Posts Profit but Issues Warning

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McDonald's Posts Profit but Issues Warning

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McDonald's reported a fourth-quarter profit of $1.27 billion on Monday, but warned that sales at restaurants open at least a year were flat last month.

The shares fell $3.03, to $51.07.

In its comments, McDonald's cited severe winter weather as the primary reason for the weakness in American sales, which were more than offset by international sales gains.

But the warning raised concerns about the impact of a possible recession, as investors focused on the slowing growth.

Weak U.S. trends are likely to put some pressure on the stock until investors have a sense of whether December was a one-month outlier or a new trend, an analyst at RBC Capital Markets, Larry Miller, said in a note to investors.

Net income for the fourth quarter was $1.06 a share, up from $1.24 billion, or $1 a share, in the period a year ago.

Excluding income tax benefits of 33 cents a share, the company earned 73 cents a share, beating analysts' consensus estimate of 71 cents, according to a Thomson Financial poll.

Revenue rose 6 percent, to $5.75 billion from $5.45 billion in the fourth quarter of 2006, also topping Wall Street's $5.61 billion estimate.

Global same-store sales rose 6.7 percent for the quarter.

Despite the December weakness, the chief executive, James A. Skinner, said the company remained confident in its American business -- its biggest market with close to 14,000 restaurants.

For the full year, McDonald's profit fell 32 percent to $2.4 billion, or $1.98 a share, from $3.5 billion, or $2.83 a share, a year earlier.

Revenue climbed 9 percent, to $22.8 billion from $20.9 billion.

[Illustration]PHOTO: A customer at a McDonald's on the North Side of Chicago. The company said severe weather has hurt sales this winter. (PHOTOGRAPH BY CHARLES REX/ASSOCIATED PRESS)