Jul 30, 2003 By Dave Carpenter Ap Business Writer 2 min read

CHICAGO (AP) – McDonald’s Corp. reported a 5 percent drop in second-quarter profit Tuesday but said sales from established U.S. McDonald’s-brand restaurants grew at their fastest pace in five years – a potential sign of a budding U.S. turnaround. Lower sales in Britain and Germany and a weak quarter in Japan because of the SARS virus pushed results below those of a year ago and kept the world’s largest fast-food restaurant chain mired in its protracted slump. McDonald’s has failed to exceed the previous year’s earnings in all but two quarters since 2000. But McDonald’s said the positive reception for its entree-sized salads and McGriddles breakfast sandwiches had helped comparable U.S. sales rise 4.9 percent from the previous year, the highest increase since 1998.

Net income was $470.9 million, or 37 cents a share, down from $497.5 million, or 39 cents a share, a year earlier. That met the consensus estimate of analysts surveyed by Thomson First Call.

Revenues were $8.08 billion, up 8 percent from $7.46 billion a year earlier.

Systemwide sales, which include results from restaurants operated by franchisees and affiliates, increased by 7 percent to $21.6 billion. “I’m pleased with the strong customer response to our innovative new products, Happy Meals and value offerings, generating early signs of progress in our U.S. operations,” said CEO Jim Cantalupo.

“This upturn reflects only the beginning of our worldwide revitalization plan.”

For the first six months, net earnings were $798.3 million, or 63 cents a share, compared with $750.6 million, or 58 cents a share, a year earlier. Revenues jumped 11 percent to $4.28 billion from $3.86 billion.

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On the Net:

www.mcdonalds.com

AP-ES-07-29-03 0959EDT