Foot-and-mouth hits McDonald's

McDonald's has seen sales of burgers fall in Europe

The American fast food giant McDonald's has said foot-and-mouth disease helped take 16% off profits in the first quarter as sales of burgers in Europe continued to flag.

Burger sales in Asia, the company's third-largest market, were down by 5%, but the US market remains strong.

The world's largest restaurant chain said it remained optimistic that European sales would improve later this year.

"In Europe, we are optimistic that lingering concerns about beef will continue to lessen as the year progresses," said chief executive Jack Greenberg.

He described the first quarter as "challenging".

Breakdown

For the first three months of 2001, income after tax was at $378.3m (£263m), or 29 cents a share, a drop of 16% from the same period a year ago.

Sales in Europe, which account for about 25% of the burger giant's total, fell 6% to $2.18bn from $2.31bn.

In the Asia-Pacific region, sales fell 5% to $1.69bn from $1.79bn.

But sales in the competitive US market rose 4% to $4.68bn.

Signs of a turnaround?

"Our recent business trends are encouraging," added Mr Greenberg, noting that in France beef sales as a percentage of the company's total sales have increased throughout the quarter.

The company expects to add approximately 1,500 McDonald's restaurants in 2001, he said.

McDonald's has experienced declining profits in Europe since sales were hit by concerns over BSE, or mad cow disease, and more recently by the foot-and-mouth crisis.

The company reported a rare profit decline in the last three months of 2000.

McDonald's shares fell six cents to $27.43 in late morning trading on Thursday on the New York Stock Exchange.

They have recently been trading at their lowest level since March 1998.