McDonald's Beats on Sales, Misses on Profit; Shares Off

Friday, 19 Oct 2012 | 8:14 AM ET

McDonald's eported profits that were less than Wall Street expectations though revenues actually were higher, as the company battles a more difficult operating environment.

Getty Images

Following the earnings announcement, the fast-food giant's shares slid 2.5 percent percent in pre-market trade. (Get real-time quotes for McDonald's here.)

The Dow component reported third-quarter earnings excluding items of $1.43 a share, below last year's $1.45 per share and beneath the analyst target of $1.47.

Revenue edged higher to $7.2 illion from $7.17 billion a year ago. Net income was $1.46 billion.

Analysts expected McDonald's to post $7.16 billion in revenue, according to a Thomson Reuters estimate. (Read More: Google's Miss Highlights Big Worry on Wall Street)

The company cited currency pressures as one reason for the lack of growth.

However, it did say global sales increased 1.9 percent and grew across each segment.

McDonald's reported $1.3 billion towards share repurchases and dividends through the quarter. The company increased its dividend 10 percent to 77 cents a share.

Foreign currency pressures from U.S. dollar strength shaved 8 cents from quarterly earnings and 16 cents through the year to date.

McDonald's and other fast food operators have been pressured by the European recession and a generally more difficult environment as discount pricing benefits begin to wear off. (Read More: Is Euro Zone Really Back 'On Track'?)

The company warned investors that conditions ahead will be uncertain.

"We expect near-term top- and bottom-line growth to remain pressured as we focus on driving guest traffic and market share by leveraging our strategies and competitive advantages in response to the global economic, operating and competitive challenges," CEO Don Thompson said in a statement.

"As we begin (the) fourth quarter, October's global comparable sales are currently trending negative," he added.

Citigroup this week warned that more difficult year-over-year comparisons also will dim the earnings picture and warned that sales are unlikely to accelerate through the remainder of 2012. Oppenheimer and UBS likewise have said they are leery of the outlook for McDonald's.


  • A researcher works on a hepatitis C virus drug at Gilead Sciences lab in Foster City, Calif.

    Gilead's net profit nearly tripled and revenue was more than $1 billion ahead of estimates, thanks to sales of a key Hepatitis C drug.

  • Mobile telecom gear maker Ericsson posted sales and first-quarter operating profit below expectations but said recent contracts won by the group would lift sales.

  • Facebook Messenger screens

    Facebook reports its first-quarter earnings Wednesday. Details to look out for include mobile ad prices and engagement, as Recode reports.

  • A customer enters a McDonald's restaurant in San Pablo, Calif.

    McDonald's reported a lower quarterly profit as sales at the fast-food chain's established U.S. restaurants fell more than expected.

Contact Earnings Central


    Get the best of CNBC in your inbox

    › Learn More