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McDonald's warns again
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June 15, 2001: 2:42 p.m. ET
Biggest restaurant chain says Mad Cow scare persisting
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NEW YORK (CNNfn) - McDonald's Corp. said Friday that second-quarter earnings would fall short of Wall Street expectations as the strong dollar and ongoing fears about Mad Cow disease in Europe bit into the company's profit.
The world's biggest restaurant chain based in Oak Brook, Ill., now anticipates a profit of 34 cents-to-35 cents a share. That's below Wall Street forecasts of 38 cents a share for the quarter, according to earnings tracker First Call.
Excluding the impact of negative currency transactions, McDonald's expects earnings of 36 cents-to-37 cents a share.
McDonald's (MCD: down $1.46 to $28.50, Research, Estimates) "expects sequential improvement in terms of earnings growth," investor relations director Mary Healy told analysts during a conference call Friday.
CEO Jack Greenberg said concerns about Mad Cow disease, have lingered longer than anticipated. Mad Cow is a disease which ultimately destroys the brain. It has been contaminating beef cattle by the thousands in Europe and can be passed on to humans.
Additionally, the economic slowdown in the United States combined with a strong overseas dollar, higher costs, and a children's meal promotion that hurt margins all contributed to the shortfall, the company said.
However, Greenberg said he anticipates mid-single-digit earnings per share growth in the second half and flat earnings for the fiscal year excluding the effect of currency transactions.
If conditions remain the same, he said earnings per share will fall six cents short of expectations for the year.
Concerns about the safety of the beef in its hamburgers hurt the company's first-quarter results, which met lowered forecasts on Wall Street. When it reported in April, McDonald's also said it was "cautiously optimistic" that results will improve in 2001.
Friday's warning is the third consecutive one for the company.
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A strong dollar hurts U.S. companies because it reduces the value of sales made in overseas currencies.
McDonald's said its global systemwide sales for the first five months of 2001 increased to $16.4 billion, up 2 percent.
In Europe, sales grew 2 percent in the first five months of the year, excluding the impact of currency.
U.S. sales grew 3 percent in the first five months and increased 9 percent in Latin America. 
-- from staff and wire reports
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McDonald’s
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