Updated from 8:24 a.m. EDTEurope's fast-food kick helped McDonald's ( MCD) deliver a fat profit for its second quarter. The burger giant said Tuesday that it earned $834.1 million, or 67 cents a share, in the quarter, compared with $530.4 million, or 42 cents a share, a year ago. The results included a 10-cent gain related to the company's partial spinoff of its Mexican food chain, Chipotle Mexican Grill ( CMG), and charges totaling 2 cents a share for an asset sale and tax expenses. Excluding the items, McDonald's earned 59 cents a share in the latest quarter. On that basis, analysts were forecasting earnings of 58 cents a share, according to Thomson First Call. The company's total revenue rose 9% from a year ago to $5.57 billion on a same-store sales gain of 5.5%. Boosted by promotions tied to the World Cup, McDonald's business in Europe recorded a 6.3% increase in comps. Its U.S. business also posted a strong same-store sales gain of 4.2%. The Asia/Pacific, Middle East and Africa regions saw a 7.2% same-store sales rise. "Europe's 6.3% comparable sales increase was the strongest quarterly result in more than 10 years," McDonald's said. "We are pleased with Europe's improving profitability and remain intent on building upon these strong results." On a conference call Tuesday, McDonald's Chief Financial Officer Matthew Paull said the company's operating income rose 12% in the quarter thanks to strong sales and lower expenses on labor and utilities. Meanwhile, he expects McDonald's food costs for key ingredients like beef and cheese will go down this year. As for Chipotle, McDonald's filed a registration statement with the Securities and Exchange Commission to spin off the remainder of the burrito chain to shareholders. It sees the deal done by the end of October. Shares of Chipotle recently were up $1.90, or 3.8%, to $52.50.
McDonald's strong results come roughly six months after the company got grilled by an activist shareholder trying to force change. Bill Ackman, a hedge fund manager with Pershing Square Capital, late last year called for McDonald's to spin off 20% of its company-operated restaurants and sell 1,000 of those company-owned stores to franchisees in an effort to unlock the value of its real estate. McDonald's agreed to provide better supplemental financial data on how its company-operated restaurants are performing compared with the franchisees, but it refused to split up the company. It also pledged to buy back $1 billion in stock, and Ackman ended his proxy fight. While its shares have gained 4% this year and outperformed the S&P 500 so far this year, McDonald's shareholders still haven't enjoyed the $10 to $15 in upside that Ackman promised would result if his plan was implemented. Concerns about the spending power of the low-income consumer amid soaring energy prices and rising interest rates have kept a lid on the stock. On a conference call Tuesday, McDonald's CEO James Skinner said U.S. consumer spending has held up well in the company's restaurants. "The popularity of our dollar menu provides the foundation of our revenue in the U.S.," Skinner said. McDonald's shares recently were trading at $34.80, down 4 cents.