McDonald's Profit Rises on Strong Overseas Sales

McDonald's, the world's largest restaurant chain, posted a higher-than-expected second-quarter profit on Wednesday, boosted by strong overseas sales.

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McDonald's overseas sales have outpaced domestic results for some time, and its emphasis on low-priced menu items, and its Dollar Menu have helped it weather the economic downturn, luring cash-strapped consumers away from higher-priced, sit-down restaurants.

Net income came to $1.19 billion, or $1.04 per share in the quarter that ended June 30, compared with its year-earlier loss of $711.7 million, or a loss of 60 cents per share, when it completed the sale of its businesses in Latin America and the Caribbean.

McDonald's said its profit in the quarter included a gain of 10 cents per share from the sale of its minority interest in sandwich chain Pret A Manger.

Excluding the gain, McDonald's earned 94 cents a share, topping analysts' average forecast of 86 cents a share, according to Reuters Estimates.

Revenue rose 4 percent to $6.07 billion, helped by a 6.1-percent increase in global same-store sales.

Analysts had been looking for $5.94 billion in overall sales at McDonald's.

Same-store sales, which track sales at its locations open at least 13 months, rose 7.4 percent in Europe, while they were up 8.8 percent in the Asia/Pacific, Middle East and Africa segment.

The United States posted comparatively modest growth of 3.4 percent in same-store sales.

McDonald's and fast-food chain operator Yum Brands have big international operations that have insulated them from the U.S. consumer spending slowdown that has caused shares in U.S.-focused chains to slide.

But investors are beginning to get more jittery about an overseas slowdown as higher costs for food and fuel put more pressure on consumers around the world.

Yum reported in its most recent quarter that rising inflation had dampened profits from China, a key growth driver.

Analysts said McDonald's has fewer outposts in China than Yum , so it is less exposed to troubles there.

McDonald's shares rose to $61.70 in premarket trading from Tuesday's close of $60.12 on the New York Stock Exchange.