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McDonald's profit dips 4% as sales slow

McDonald's Corp. said Monday that its net income

McDonald's Corp. said Monday that its net income fell 4 percent in the second quarter. (April 20, 2012) Credit: AP

Not even McDonald's Corp. has an iron stomach when it comes to the global economic downturn.

The world's largest hamburger chain has thrived in boom and bust times by selling cheap eats and constantly updating its menu with popular items such as fruit smoothies and snack wraps. But the company is starting to show signs of strain from global economic pressures, intensifying competition and penny-pinching customers who are eating out less often in some hard-hit regions around the world.

The Oak Brook, Ill.-based company said Monday that its net income fell 4 percent in the second quarter as a strong dollar took a hit on results.

Like other U.S. companies, McDonald's is being squeezed by unfavorable currency exchange rates. When the dollar is rising against the other world currencies, companies that do business internationally take a hit when converting local currencies back into the dollar. McDonald's is also facing higher costs for labor and ingredients.

For the quarter, McDonald's says it earned $1.35 billion, or $1.32 per share, down from $1.4 billion, or $1.35 per share, in the year-ago period. Shares Monday fell $2.64, or 2.88 percent, to close at $88.94 on the New York Stock Exchange.

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