updated 1/24/2007 12:52:00 PM ET 2007-01-24T17:52:00

McDonald’s Corp., the world’s largest fast-food chain, said Wednesday that its fourth-quarter profit more than doubled, thanks in large part to the spinoff of a burrito chain and strong sales in Europe.

The earnings were in line with preliminary results released last week but the stock slipped after some analysts said operating profits were below their expectations.

The restaurant company earned $1.2 billion, or $1 a share, in the quarter ending Dec. 31. That was up from $608.5 million, or 48 cents a share, during the same period last year.

McDonald’s revenue climbed 11 percent to $5.6 billion, from $5.01 billion during the year-ago period.

Even without the gain from the spinoff of its Chipotle chain, McDonald’s said income from continuing operations climbed to $761.2 million, a 26 percent increase from $604.8 million last year.

The Oak Brook, Ill.-based company said the spinoff added 39 cents per share to its results.

On average, analysts surveyed by Thomson Financial forecast quarterly income of 61 cents per share and revenue of $5.7 billion. Those estimates typically exclude one-time items.

“McDonald’s is delivering the strongest business results in 30 years,” CEO Jim Skinner said in a statement. “... Our strategic focus on serving customers an effective balance of new menu items, premium products and everyday value in convenient, contemporary locations continued to drive results.”

For the year, McDonald’s said it earned $3.5 billion, or $2.83 per share, a 36 increase from last year. For 2006, the company had $21.6 billion in revenue.

Skinner said the company will invest nearly $2 billion this year to open 800 new restaurants and improve existing locations. The company said it plans to open nearly 400 restaurants in Japan and China.

UBS analyst David Palmer said McDonald’s had better-than-expected profit margins, which increased for the fourth consecutive quarter.

“Margin expansion should continue in 2007, and solid growth in the U.S. behind high-margin breakfast should help,” he wrote in a research note published Wednesday. “We also believe European growth can remain solid.”

Earlier this month, McDonald’s said its European operation had its best year in nearly 15 years with a 5.8 percent comparable sales increase in 2006. For the quarter, European sales climbed 7.3 percent.

In the U.S. same-store sales, an important retail measure that compares stores open at least a year, increased 5.9 percent for the quarter.

Laurie Hahn, an analyst at Deutsche Bank Securities, said the company’s new chicken snack wrap and extended hours are helping to increase the value of the McDonald’s brand.

“In short, we see continued progress on strengthening brand equity,” she wrote in a research note.

Executives said they expect the company to have annual sales growth of up to five percent.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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