McDonald's Corp. reported a 16% drop in first-quarter earnings as sales of hamburgers in Europe continued to slide following outbreaks of animal diseases in the region.
The results were also hurt by weak economies in some markets and made tougher by strong year-ago results. The profit decline marked the second consecutive quarterly drop for the world's largest restaurant operator.
McDonald's said profit fell to $378.3 million, or 29 cents a share, from $450.9 million, or 33 cents, a year ago. Analysts had expected profit of 29 or 30 cents, after the company issued an earnings warning last month.
Revenue rose 2% to $9.65 billion, driven by restaurant expansion and the acquisition of the ailing Boston Market chain.
Sales in Europe, which account for about one-fourth of McDonald's total, fell 6% to $2.18 billion. Sales at restaurants open at least one year were showing improvements in several key markets in March, the company said. McDonald's has been pushing more non-beef items on its European menus.
Sales in McDonald's competitive U.S. market rose 4% to $4.68 billion.
The company reiterated its earlier projection of full-year earnings growth of 6% to 10%.
Chief Financial Officer Michael Conley said that "uncertainties" surround the company's outlook for the second quarter and that most improvement was expected in the second half of the year.
Shares of Oak Brook, Ill.-based McDonald's closed off 2 cents at $27.47 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* Allstate Corp., the No. 2 U.S. auto and home insurer, said first-quarter profit rose 19% to $552 million, or 76 cents a share, beating analyst forecasts of 72 cents, due to lower claims and price increases.
* Blockbuster Inc.'s first-quarter earnings rose 22% to $46.5 million, or 27 cents a share, beating expectations of 24 cents, on increased DVD rentals of movies such as "Meet the Parents." Blockbuster, a unit of Viacom Inc., said sales rose 8% to $1.31 billion. Rentals of digital video discs were three times higher than a year ago. The company also is benefiting from an agreement to sell Hughes Electronics Corp.'s DirecTV satellite service at Blockbuster stores.
* Knight Ridder Inc. said first-quarter earnings fell 75% to $40.7 million, or 47 cents a share. The newspaper publisher's revenue fell 3.1% to $735.4 million.
* Liz Claiborne Inc.'s profit rose 4.6% to $45.5 million, or 87 cents a share, matching forecasts, on a 2.1% rise in sales to $826.7 million.
* MGM Mirage Inc.'s profit climbed 76% in the first quarter to $85.2 million, or 53 cents a share, better than the 44 cents analysts expected, boosted by last year's acquisition of Mirage Resorts Inc. Revenue surged 152% to $1.07 billion, as gambling revenue more than doubled to $575.4 million.
* Marsh & McLennan Inc.'s first-quarter earnings rose 9% to $369 million, or $1.27 a share, as reduced expenses offset declining revenue at the biggest insurance broker. Revenue fell 3% to $2.6 billion. The company's mutual fund unit, Putnam Investments, saw earnings fall 16% to $217 million in the first quarter as the stock market slump hammered the firm's portfolios. Assets under management dropped 12% to $352 million,
* McGraw-Hill Cos. said first-quarter profit fell 52% to $16.1 million, or 8 cents a share, as its textbook business posted a wider loss, advertising sales slumped at Business Week magazine and the company's television stations. The company, which also owns the Standard & Poor's bond-rating agency, said sales rose 7.9% to $846.4 million. The earnings were a penny better than analysts expected.
* R.J. Reynolds Tobacco Holdings Inc. said first-quarter profit rose 27% to $100 million, or 98 cents a share, a penny higher than analysts' average estimate, as higher cigarette prices and interest income offset a steeper-than-expected drop in the volume of cigarettes shipped. Revenue was up 2.6% to $1.95 billion.
* Sears, Roebuck & Co. reported a 25% decline in first-quarter earnings to $176 million, or 53 cents a share, on an industrywide retail slide that hurt sales at both its department and automotive stores. The retailing giant also said second-quarter profit will suffer at the hands of a slowing U.S. economy. The latest results matched analyst forecasts that had been lowered from 57 cents last week based on a warning from Sears. Total sales edged down 0.8% to $8.86 billion. Income from the company's credit operations was off 2%, with revenue down 8%. Sears said it's reviewing all aspects of its retail business in a bid to improve profitability.
* Southwest Airlines Co.'s first-quarter profit rose 27% to $121 million, or 15 cents a share, as the low-fare carrier attracted business travelers concerned about holding down costs in a slowing economy. Revenue rose 15% to $1.43 billion. The results met analyst forecasts. Most large U.S. airlines posted losses for the first quarter.