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Mon, Mar 25, 2002 - Page 21 News List

Euro, disease take a bite out of McDonald's profits


McDonald's Corp, the world's largest restaurant chain, said earnings will fall for a sixth quarter because sales were hurt by a decline in the euro and fears of "mad-cow" disease in Japan.

First-quarter net income will be about US$0.18 to 19 cents a share, spokeswoman Anna Rozenich said. The forecast includes a reduction of US$0.8 for an accounting change, she said. A year ago, McDonald's had net income of US$378.3 million, or US$0.29.

Chief Executive Jack Greenberg has cut profit forecasts in four of the past five quarters for McDonald's, whose stock has dropped 31 percent since he became chairman in May 1999. This quarter, a 5.3 percent decline in the euro from a year ago reduced sales in Europe, McDonald's biggest market after the US, while consumers bought fewer hamburgers in Japan.

"Every quarter they have some factor affecting their business," said money manager Bill Cottrell of Ohio State Teachers Retirement System, which owns 2.5 million McDonald's shares and manages US$52 billion. "It's frustrating."

McDonald's fell US$1.05, or 3.7 percent, to US$27.65. The stock's decline since Greenberg became chairman is about double the drop in the Standard & Poor's 500 Index. The company, based in Oak Brook, Illinois, has more than 30,000 restaurants in 121 countries.

Sales were little changed at US$6.2 billion in January and February.

Sales at McDonald's Japanese unit, which generates about 6 percent of the company's profit, have fallen after three cows were found infected with ``mad-cow'' disease.

"Concerns about the safety of Japanese beef continue to impact sales, even though McDonald's Japan only uses beef from Australia and New Zealand," Greenberg said in a statement.

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