The McDonald’s juggernaut continued in the first quarter, as the fast-food giant Wednesday bucked the global economic meltdown with a profit that topped Wall Street’s expectations.
Still, Oak Brook-based McDonald’s Corp. noted that the weak economy hurt sales in its biggest European market, Germany, and in a key growth area, China.
McDonald’s posted net income of $979.5 million, or 87 cents a diluted share, up 4 percent from the year-ago quarter’s $946.1 million, or 81 cents a share. Excluding a 4-cent-a-share gain from the sale of an investment, McDonald’s per-share earnings were 83 cents, a penny above analyst forecasts.
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“The company is just kind of marching along,” said Jack Russo, a stock analyst at Edward Jones. “There was sales progress really across the board in spite of a really tough economy.”
Global same-store sales in the first quarter rose 4.3 percent over the same time last year, while they jumped 4.7 percent in the U.S. The U.S. business was driven partly by increased sales of chicken products, beverages and breakfast items.
In April, the company’s sales have been at least as strong around the globe, if not stronger, than in the first quarter, McDonald’s Chief Executive Jim Skinner told analysts in a conference call.
Still, the tough economy caught up with McDonald’s in two key areas. Sales were “soft” in Germany during the quarter, Skinner said. And “we have seen a slowdown in China due to the economic environment there,” he said.
Meanwhile, the stronger dollar helped put a slight damper on McDonald’s sales, which totaled $5.08 billion, below analysts’ forecasts of $5.18 billion and down from last year’s $5.6 billion.
The rising dollar has taken a bite out of sales and profit at most U.S. firms with extensive global operations.
That said, the company did better than expected in the United States during the quarter, said David Palmer, a stock analyst at UBS.
And Palmer and other analysts said they weren’t worried about long-term problems in Germany or China.
“This is really a company with more upside as the year goes on,” Palmer said.
McDonald’s stock, which rallied initially after earnings were released, lost $1.38, or 2.5 percent, to $54.25.
Boeing Co.: Earnings fell by half in the first quarter, and landed short of analyst forecasts, as deepening troubles in the airline industry took a toll on profit margins at the Chicago-based aerospace giant.
Unlike during other downturns in the notoriously volatile airline industry, Boeing can’t count on defense spending to offset declines in its aircraft orders.
Governments around the world are paring military spending, and Boeing appears to have fared the worst among major defense contractors in the budget proposed by Defense Secretary Robert Gates, analysts said.
Meanwhile, airline customers that ordered passenger aircraft or cargo planes during earlier, better times in the aviation sector are finding they don’t need or can’t pay for jetliners on the order books at Boeing and archrival Airbus SAS.
Boeing said first-quarter net income was $610 million, or 86 cents a diluted share, down from $1.21 billion, or $1.62 a share, a year earlier.
Profit declined even though revenue rose 3 percent, to $16.5 billion from $15.99 billion.
Excluding a small one-time charge, Boeing’s per-share results were 4 cents below the 91 cents Wall Street had anticipated. Nonetheless, Boeing shares rose 65 cents, to $37.30, in trading Wednesday.
At Boeing’s defense segment, revenue rose 2 percent, to $7.72 billion, but operating profit fell 18 percent, to $709 million, because of a less-favorable product mix.
The company’s flagship commercial-aircraft group delivered six more jets than it did in the year-ago quarter, and revenue firmed 5 percent, to $8.55 billion. But operating profit sank 58 percent, to $417 million.
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