000213 McDonald's January Sales Up, Sees Strong 2000February 12, 2000Chicago - McDonald's Corp. reported sales at its company owned and franchised restaurants rose 10% on a constant currency basis in January, and the fast food giant said it expected strong growth in domestic and international operations in 2000. “Our market share lead continues to grow in every country that we do business, and the U.S. and Europe momentum which we've experienced in the last two years clearly continues into the year 2000,” Jack Greenberg, McDonald's chairman and chief executive officer, told Wall Street analysts on a conference call. “Some of the challenges we've faced in international markets are largely behind us.” McDonald's, the world's largest fast food chain, also told analysts that it expects its earnings growth for 2000 to come in at the high end of the company's previously stated projections for earnings growth of 10 to 15%. “This management team will not be satisfied unless we are in the top end of this range,” Greenberg said. In full-year 1999, Oak Brook, Ill.-based McDonald's reported earnings of $1.44 a share. Shares of McDonald's closed up 1-6/16 at 36-5/16 on the New York Stock Exchange. The company also sought to soothe lingering investor worries about the decline in company-operated margins reported in the 1999 fourth quarter and said it sees margin improvement in its Asia Pacific and South America operations in the first quarter of 2000. European margins were also down in the 1999 fourth quarter due in part to higher labor costs in the United Kingdom and France, but the company said that trend could reverse over time. “While we don't like to see declines in margins, we feel very good about Europe's overall level of profitability,” Jim Cantalupo, McDonald's president told analysts. “I see no structural reason that would prevent us from maintaining or growing these margins over time.” The company also said again it would consider raising prices to improve margins, but only as a last resort. McDonald's also said it would report its sales data on a monthly basis from now on in an effort to increase communication with investors. Sales information in constant currencies excludes the effect of foreign currency translation on reported results, except for hyperinflationary economies, such as Russia, whose functional currency is the U.S. dollar, the company said. McDonald's January 2000 reported sales were $3.16 billion, compared with January 1999 sales of $2.94 billion, a 7% increase. In the U.S., January sales were $1.41 billion, compared with $1.33 billion last year, a 6% increase. In Europe, constant currency sales increased 10%. January's reported sales of $792.1 million were reduced significantly by the weaker Euro, compared with January 1999 sales of $797 million, the company said. However, since the Euro depreciated against the U.S. Dollar throughout 1999, McDonald's said it expects this negative impact to lessen throughout 2000. In Asia/Pacific, constant currency sales increased 13% in January. Reported sales were $644.7 million compared with January 1999 sales of $541.6 million, an increase of 19%. In Latin America's sales increased 12% on a constant currency basis in January. Reported sales were $152.3 million compared with $150 million in January 1999, up 2%. McDonald's operates more than 26,000 restaurants serving more than 43 million people a day in 118 countries.
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