Page last updated at 14:20 GMT, Monday, 9 March 2009

McDonald's warns of revenue drop

McDonalds branch in Chicago
McDonald's US sales were up 2.8% on the year before

US fast-food chain McDonald's warned that the stronger dollar and commodity costs will squeeze its first-quarter revenues and earnings per share.

First quarter revenues could be at least $600m (434m) lower, it said.

McDonald's sales have remained steady in the economic downturn, helped by its low prices and the ubiquity of its fast-food outlets.

It posted a 1.4% rise in sales in February, compared with a year earlier, at outlets open at least 13 months.

The small increase in sales came despite having one fewer day in February this year than in last year's Leap Year.

But the rates of increase are substantially lower than last year when, with McDonald's reporting an increase of 11.7% in February 2008.

Sales were up 2.8% in the US, helped, it said, by the chicken menu, particularly the quarter pounder. Sales were down 0.2% in Europe compared with the year before .

"If foreign currency rates remain at current levels, currency translation is expected to negatively impact first-quarter revenues by at least $600m and earnings by at least $0.07 to $0.09 per share," the company said in a statement.

"In addition, as previously stated, commodity cost pressures are expected to have a greater impact during the first half of the year."

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