McDonald's Shares Hit High After Profit Beats Estimates

CNBC.com with Reuters

McDonald'sshares hit an all-time high Friday, after the company reported a higher-than-expected quarterly profit on strength in Europe and the U.S.


June sales at restaurants open at least 13 months were stronger than analysts expected in each of the world's biggest hamburger chain's operating units.

During the month, closely watched same-restaurant sales were up 6.9 percent in the U.S., 9.1 percent in Europe, and 4.8 percent in McDonald's Asia/Pacific, Middle East and Africa unit.

Analysts were expecting June same-restaurant sales to rise 2 percent in the U.S., 3 percent in Europe, and 2 percent in the Asia/Pacific, Middle East and Africa unit. Europe is McDonald's largest market for sales, contributing about 40 percent of revenue, and the U.S. is a close second.

For the second quarter, sales at established restaurants were up 4.5 percent in the U.S., up 5.9 percent in Europe and up 5.2 percent in the Asia/Pacific, Middle East and Africa unit.

The company said net income rose to $1.41 billion, or $1.35 per share, from $1.23 billion, or $1.13 a share, a year earlier.

The results exceeded the analysts' average forecast of $1.28 per share, according to Thomson Reuters I/B/E/S.

Revenue rose to $6.91 billion from $5.95 billion.

McDonald's has been taking market share from its fast-food peers. It has added more value-priced Dollar Menu items, as well as high-margin beverages such as coffee to broaden its appeal beyond the young males that account for the biggest share of sales at most other fast-food chains.

David Palmer, senior restaurant and packaged food analyst at UBS, told CNBC that McDonald's benefited in the quarter from strong sales of its McCafe beverage line, including the new Frozen Strawberry Lemonade, which the company introduced in May 2009.

"Their cold beverage initiative is obviously helping during this hot month," he said. "It's also helping their margins as well, you're seeing the food inflation and those are high-margin products that are helping to bolster the margin for them and for franchisees just at a time when inflation is peaking."

McDonald's shares rose more than 2 percent to a record in pre-market trading.

Get real-time quotes for McDonald's here.

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