McDonald’s 4Q net income jumps 11 percent

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NEW YORK (AP) — McDonald’s says net income rose by 11
percent in the fourth quarter, as the fast-food giant continues to
attract budget-conscious customers.
Net income of $1.38 billion translated to $1.33 per share, beating the $1.29
predicted by analysts polled by FactSet.
Revenue jumped 10 percent to $6.82 billion, slightly above expectations of $6.81
billion.
McDonald’s
has performed well throughout the recession and its aftermath with a
two-pronged strategy. It’s continued to attract a base of cash-strapped
customers by keeping prices low, and it’s been able to lure the newly
budget-conscious, who in previous years might have shunned the burger
chain, with new offerings like smoothies, lattes, and remodeled
restaurants.
As the world’s largest burger chain, its game plan is
often copied by other fast-food restaurants. And its decisions on
pricing, menu items and other topics serve as a bellwether for the rest
of the industry.
In a statement, CEO Jim Skinner said the company
plans to open 1,300 new restaurants in the coming year. The additions,
which would include Japan and Latin America, would add a net gain of
about 900 restaurants to the 33,500-plus locations around the world.
McDonald’s,
whose share price has climbed from about $63 to just more than $100 in
the last two years, has been praised for moving to where demand is. The
company gets less than a third of its revenue from the U.S. Europe makes
up 40 percent, up from 36 percent five years ago. The European
restaurants are performing well, growing revenue 9 percent, even "in the
face of ongoing economic uncertainty," McDonald’s said in a statement.
The
region that covers Asia Pacific, Africa and the Middle East makes up 22
percent of revenue, up from 14 percent five years ago, with some of
that growth focused on China. That region grew revenue by 13 percent.
Skinner
also said McDonald’s Corp. would continue to set aside money for
renovating restaurants. The renovations have helped attract new
customers, but also have needled some franchisees who had to pay some of
the costs.
The cost of raw ingredients will be a key topic when
executives answer analysts’ questions about earnings in a conference
call Tuesday morning. McDonald’s raised prices twice last year and left
the door open for more increases as it struggled with rising costs for
ingredients like wheat and corn. Now, costs for many commodities have
leveled off, but analysts will want to know if McDonald’s sees more
increases in the near future.
It said in its earnings release that
it expects costs for most of its commodities to in the U.S. to increase
4.5 to 5.5 percent in the U.S., and 2.5 to 3.5 percent in Europe. Three
months ago, it predicted increases of 4.5 to 5 percent for both the
U.S. and Europe for 2011.
Copyright 2012 The Associated Press.

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