McDonald's Posts 2Q Loss of $711.7M
Tuesday, July 24, 2007; 6:29 PM
CHICAGO -- A massive one-time charge dragged down McDonald's Corp. second-quarter results Tuesday as the fast food chain lost $711.7 million _ only its second quarterly loss ever.
Excluding the $1.6 billion charge relating to the sale of some Latin American and Caribbean operations, the world's largest restaurant company said its net income grew 4 percent to $869.9 million, or 71 cents per share.
"Our business is strong and we are looking to the future with one goal in mind, building on our momentum," said Chief Executive Jim Skinner.
For the quarter ending June 30, the world's largest restaurant chain said its net income swung to a loss of 60 cents per share. That's compared to a second-quarter profit of $834.1 million, or 67 cents per share, a year earlier.
In April, McDonald's announced a plan to cede control of 1,600 restaurants in 18 Latin American and Caribbean countries in an effort to strengthen profit. While the deal includes a $1.31 per share charge, it reduces the company's financial exposure in a challenging region and will net McDonald's about $700 million in cash, which it said will be used to increase share buybacks and dividends.
McDonald's only other quarterly loss, caused by a drawn-out sales slump, was for the fourth quarter of 2002.
Also Tuesday, the company said Matthew Paull, its highly regarded 56-year-old chief financial officer, would retire.
McDonald's said Paull, who joined the company in 1993, would stay at least through the end of the year before leaving to pursue a teaching career.
Revenue climbed 12 percent to $6 billion from $5.36 billion, spurred by strong breakfast and coffee sales as well as sales of its popular snack wraps and chicken items.
On average, analysts surveyed by Thomson Financial forecast earnings of 71 cents per share and revenue of $5.9 billion.
Those forecasts typically exclude one-time items.
Skinner said McDonald's was continuing to test more coffee drinks, both hot and cold, as it tries to angle in on the nation's $60 billion beverage industry.