McDonald's profit rises, but U.S. growth slows in December

This is a rather interesting Marketwatch story:

CHICAGO (MarketWatch) -- Although McDonald's continued its remarkable run in the fourth quarter, posting profit and sales gains Monday, a slowdown in its U.S. growth in December sent investors to the sidelines - and the fast-food chain's stock down in early trading.

Before the start of trading, McDonald's said it earned $1.27 billion, or $1.06 a share, on the period - up from $1.24 billion, or $1, a year ago. Knocking out various charges and gains, the company would have earned $1.06 a share on a continuing operations basis, up from 61 cents. Income tax and foreign currency benefits added 37 cents a share to the company's bottom line.

The average estimate analysts polled by Thomson Financial had been for the company to earn 71 cents a share.

Revenue rose 6% to $5.75 billion, with global same stores sales up 6.7%, or 3.3% in the U.S. although the company said "severe winter weather throughout the month and softer consumer spending resulted in December U.S. comparable sales being flat."

And although Jim Skinner, chief executive said in the earnings report that he remains "optimistic" about 2008, the domestic slowdown may have sparked a bit of a sell-off: McDonald's shares were down more than 6% to $50.66 out of the open.

In Europe, the company said it managed double-digit revenue and operating income growth, with rises in same-store sales "in every market as a result of unique marketing and locally appealing menu offerings."

But its Asia/Pacific, Middle East and Africa division was the true standout, with an 11.4% same-store sales jump, its biggest move in more than 15 years.

Separately, McDonald's said that its board has decided that beginning in 2008, dividends will be paid on a quarterly basis, with the one for the first quarter of 2008 to be handed out on March 17 to shareholders of record as of March 3.

What this story is saying is that McDonald's is still earning profit, but the profit is coming from its European, Asia/Pacific, Middle Eastern, and African markets. Sales are increasing in the world markets. However, in the U.S., there is a slowdown in McDonald's sales due to "severe winter weather," and "softer consumer spending." I'd say that with the U.S. economy slowing down, consumers are cutting back on their Big Macs and Egg McMuffins. But then again, McDonald's doesn't want to admit that a possible recession is going to hurt their U.S. market.