McDonalds Earnings Grow By 9%

McDonald’s Corp. (NYSE:MCD) announced on Friday that they have noticed 9 percent jump in profits in the third quarter.

McDonald’s in a statement said that the earnings touched $1.51 billion, from around $1.39 billion seen last year in the same quarter. The fast food chain also said that it is planning price increases on account of increasing commodity prices. The announced earnings however beat analyst forecasts. Analysts were projecting earnings of $1.40 per share, whereas the fast food chain reported earnings of $1.45 per share. The company’s revenue increased to around $7.17 billion.

Chief Executive Officer of McDonalds, Jim Skinner said that the markets are fragile and the sales are uncertain. He said that even though they are out of recession, the business still feels like it is going through a prolonged recession. The CEO noted that the unemployment levels are over 9 percent and the stock markets are going through their worse phase in two years, the effects of which can be seen in the fast food giant’s results. Customers are practicing caution and are very hesitant to go out for lunch and dinner.

The company is further struggling with increasing commodity costs and is trying to balance than by rising product costs. In United States the cost of beef has gone up. It is hoped that the beef costs will come down once the summer barbeque season ends. To combat the increasing commodity prices, the company has increase the prices by 1 percent in May, adding to the 1.4 percent increase announced in March. There are additional price increases planned in the coming months.

According to Bensen, the small increases in prices have been responded well by customers, who haven’t complained. The commodity costs are projected to increase in 2012 and also additional price increases will follow.

The company announced growth in same stores in every part of the world, despite the increase in prices. The U.S. stores showed an increase of 4.4 percent, 4.9 percent in Europe, and about 3.4 percent in Middle East, Asia and Africa. United Kingdom, France, Germany and Russia were the largest contributors to the growth in sales.

McDonalds has introduced a variety of new products in the hopes of attracting new customers. McDonalds has introduced new lines of drinks such as McCafe Coffees and Mango Pineapple smoothie. In the last quarter the company focused its advertising on the smoothie. The company also introduced wholesome breakfast options that include McMuffins and oatmeals.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.