McDonald's in loss for first time

news.sify.com Illinois, Jan 24

The world's biggest fast-food chain, McDonald's Corp., on Thursday reported its first quarterly loss since its birth in 1955, as it shut down hundreds of outlets.

Losses amounted to 343.8 million dollars, or 27 cents a share, in the three months to December 31, compared with a year-earlier net profit of 271.9 million dollars, or 21 cents a share, the group said in a statement.

Revenue for the group, which serves an estimated 46 million customers daily in 121 countries, rose 3.4 percent to 3.90 billion dollars in the quarter.

"Our first priority is to fix our existing business and, in doing so, rebuild our foundation for profitable growth," said chairman and chief executive Jim Cantalupo.

McDonald's said it recorded 810.2 million dollars in charges in the fourth quarter related to restructuring, including the closure of 719 restaurants, mostly in the United States and Japan.

McDonald's said it planned to close 600 restaurants in 2003, of which 517 closures had already been announced.

At the same time, however, it expected to open 850 traditional restaurants, 380 satellite restaurants and 150 partner brand outlets, the group said.

McDonald's said it would provide no earnings-per-share targets for the first quarter of 2003 or the full year, because it was focused on improving results over the longer term.

"Considering the size of our business, 10-to-15-percent earnings per share growth target is not realistic," Cantalupo said. "We will seek reasonable growth that creates shareholder value."

Despite a tough year, including the loss of 13.9 million dollars in Venezuela, where all of its outlets were shut by a general strike, McDonald's got some good news on the eve of its results.

A US federal judge on Wednesday threw out a suit filed on behalf of children who claimed McDonald's caused their obesity by failing to warn that its burgers and fries could make them fat.

"It is not the place of the law to protect them against their own excesses," Judge Robert Sweet said in dismissing the case before it got to trial.

"Nobody is forced to eat at McDonald's."

The fast-food group said its sales were boosted in the fourth quarter and the whole of 2002 by a restaurant expansion.

Despite the closures of underperforming restaurants in 2002, McDonald's also opened 1,639 new outlets in the year.

Over 2002 as a whole, net profit at McDonald's slumped 45.4 percent from a year earlier to 893.5 million dollars. But sales bulged 3.6 percent to 11.50 billion dollars.

US sales increased in the fourth quarter and the full year, although there was a general slowdown in the restaurant industry in the second half of 2002, it said.

European sales rose, helped by a strong performance in France but offset by weakness in Germany and Britain.

In Asia, Japanese sales were down, partly because of the weak economy and stubborn fears about mad cow disease. But revenue expanded in China, McDonald's said.