McDonald's Corp on Tuesday said it will sell its remaining stake in Chipotle Mexican Grill Inc by the end of October to focus on its hamburger restaurants, where new menu items and World Cup promotions helped drive a 57 percent rise in quarterly profit.
The world's largest restaurant chain reported higher second-quarter margins and strong sales, particularly in Europe, as the World Cup soccer tournament lifted demand in host country Germany.
The stock rose 1 percent in early New York Stock Exchange trading. "Europe's 6.3 percent comparable sales increase was the strongest quarterly result in more than 10 years," McDonald's Chief Executive Jim Skinner said in a statement. "We are pleased with Europe's improving profitability and remain intent on building upon these strong results."
Analysts said the results, which came less than a week after rival Yum Brands Inc - operator of the Taco Bell, Pizza Hut and KFC chains - posted disappointing US sales, showed that McDonald's was on the right track after a three-year turnaround effort that included adding menu items and extending hours. The quarterly results contained no major surprises since McDonald's had given higher-than-expected preliminary earnings figures last week, sending its stock higher.
McDonald's reiterated that it expects to return at least $5 billion to $6 billion to shareholders through dividends and share repurchase in 2006 and 2007 combined.
The Oak Brook, Illinois-based company said it plans a tax-free exchange of Chipotle shares for McDonald's stock, and will file a registration statement with the US Securities and Exchange Commission in the coming weeks.
The company had previously said it would dispose of its remaining Chipotle stake by the end of the year, but this was the first time it had given an October date.
McDonald's confirmed that second-quarter net income rose to $834.1 million, or 67 cents per share, from $530.4 million, or 42 cents per share, in the same period a year earlier.