McDonald’s Corp.’s fourth-quarter earnings rose 9 percent, excluding costs for installing a new cooking system in its U.S. restaurants, as the fast-food giant continued its turnaround.
The Oak Brook-based company’s efforts to improve domestic operations by cutting costs and decentralizing management helped boost sales to the point where McDonald’s share of the U.S. hamburger business grew to its highest level in 10 years.
McDonald’s also is benefiting from increased expansion overseas, where it has the most potential for growth. Double-digit sales increases in Latin America and Europe more than offset a slight decline in Asia.
McDonald’s said that excluding one-time items, its quarterly profit rose to $447.1 million, or 64 cents a diluted share, from $410.9 million, or 58 cents a diluted share, a year earlier. Including an after-tax charge of $98.6 million, or 14 cents a diluted share, for its Made For You cooking system, net income fell 15 percent, to $348.5 million, or 50 cents a diluted share.
McDonald’s results were in line with Wall Street expectations, according to a survey of analysts by First Call Corp.
Systemwide sales rose 9 percent, to $9.32 billion from $8.53 billion.
For the year, profits excluding charges rose 8 percent, to $1.77 billion, or $2.52 a diluted share, from $1.64 billion, or $2.29 a share. Including the Made for You charges, profits fell nearly 6 percent, to $1.55 billion, or $2.21 a diluted share.
Systemwide sales rose 7 percent, to $35.98 billion from $33.64 billion.
MCDONALD’S CORP.
In millions except for per-share data
4th Qtr. Dec. 31 1998 1997
Revenues 3,221 2,953
Extraordinary loss a98.6
Net income (loss) 348.5 410.9
Per share (basic) 0.51 0.59
Per share (diluted) 0.50 0.58
Year 1998 1997
Revenues 12,421 11,409
Extraordinary loss b219.1
Net income (loss) 1,550.1 1,642.5
Per share (basic) 2.27 2.35
Per share (diluted) 2.21 2.29
a–After-tax charge equivalent to 14 cents per diluted share related
to incentive payments to McDonald’s owner-operators for installation of
Made for You cooking system.
b–After-tax charges equivalent to 31 cents per share related to Made
for You costs and layoffs and consolidation of office facilities.
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