April 13 (Bloomberg) -- A stronger brew of coffee at McDonald's Corp. helped lift U.S. sales in the first quarter, while the fast-food chain struggled in Europe.

Gains in the U.S. spurred a 5.2 percent increase in worldwide sales at restaurants open at least 13 months, the biggest rise in six quarters. Net income fell to about 49 cents a share from 56 cents a year earlier, when the company had a tax benefit, Oak Brook, Illinois-based McDonald's said today in a preliminary earnings statement. Profit matched analysts' estimates.

McDonald's, the world's largest restaurant company, introduced a new premium-roast coffee in February to draw customers from chains such as Dunkin Donuts and Starbucks Corp. Same-store sales in Europe increased 2 percent, the weakest gain in three quarters, hurt by cold weather and a later Easter.

``They've reenergized same-store sales in the U.S.,'' said Appleton, Wisconsin-based Chris Scheuer, an analyst for Thrivent Financial for Lutherans, which manages $67.5 billion, including 893,485 McDonald's shares as of Dec. 31. ``For the stock to continue to be a good performer, it's going to come down to a sustainable improvement in Europe.''

Shares of McDonald's, which operates 31,900 restaurants, fell 34 cents to $34.85 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has increased 3.5 percent this year after a gain of 5.2 percent in 2005. The company will report final first-quarter results on April 21.

U.S. Sales

McDonald's Chief Executive Officer Jim Skinner unveiled new products in the U.S. to spur sales growth. In January, the company introduced a $3.29 spicy-chicken sandwich and added the new coffee a month later.

U.S. same-store sales surged 6.6 percent in the quarter, adding to three consecutive years of growth. Sales in Asia/Pacific, Middle East and Africa increased 4.1 percent, the company said.

The stronger U.S. dollar reduced first-quarter profit by 1 cent a share, McDonald's said. Closing 25 U.K. restaurants, buying certain Brazilian franchisees and a loss on the anticipated sale of a small market in Europe led to costs of 4.5 cents.

The company recorded a gain of 3.5 cents from January's initial public offering of Chipotle Mexican Grill Inc. The year- earlier quarter had a tax benefit of 13 cents.

A.G. Edwards & Sons Inc. analyst Jack Russo in St. Louis estimated McDonald's earned 50 cents a share, 1 cent less than the average estimate of 16 analysts surveyed by Thomson Financial. Russo is among analysts top ranked for accuracy by StarMine Corp. Thomson didn't return a telephone call seeking the parameters for the estimates in its survey.

Matching Estimates

Prudential Equity Group LLC analyst Larry Miller in Atlanta said McDonald's per-share earnings matched the average analysts' estimate and missed his projection by 1 cent because of a greater-than-expected impact of foreign exchange. The analyst rates the shares as ``overweight.''

Longer hours, including 4,900 of 13,700 U.S. restaurants operating round the clock, pushed U.S. sales above analysts' estimates.

Extended hours added about a percentage point to March's 6.6 percent U.S. same-store sales gain, according to J.P. Morgan Securities Inc. analyst John Ivankoe, who's based in New York and rates the shares as ``overweight.'' He estimated U.S. sales would increase as much as 4 percent.

Stronger Coffee

The debut of stronger coffee ``is driving traffic and largely responsible for the increased breakfast sales --clearly a very solid start to this long-awaited product,'' A.G. Edwards's Russo wrote today.

In the year-earlier quarter, McDonald's net income climbed 42 percent on a $179 million tax gain after it settled a U.S. Internal Revenue Service audit.

Concerns about obesity in the U.K. spurred McDonald's last year to spend more on advertising to burnish its image among consumers who view its food as unhealthy.

During the first quarter, the chain promoted toasted-deli sandwiches and distributed coupons in the U.K., which, along with Germany and France, accounts for 75 percent of McDonald's profit in Europe, according to analysts.

Europe was the chain's largest market by sales in 2005, while it trailed the U.S. in profit, according to a regulatory filing.

U.K. Concern

The U.K. is ``the area of greatest concern for management,'' Lehman Brothers Holdings Inc. analyst Jeffrey Bernstein wrote March. 31. McDonald's is ``often the scapegoat'' for the problems of restaurant food safety and the poor nutritional value of menu items, he said.

Bernstein, who's based in New York, is among 12 analysts tracked by Bloomberg who rate McDonald's a ``buy,'' while six say ``hold.''

In the U.S., Skinner, 61, added the spicy-chicken sandwich after debuting three varieties of premium-chicken sandwiches in August and $2.99 fruit-and-walnut salads in May. McDonald's plans to add an Asian-chicken salad next month.

``The product launches and the coffee initiative are helping profit and same-store sales,'' said Craig Nedbalski, a Cleveland- based analyst at Fifth Third Asset Management, which owned about 1.5 million McDonald's shares on Dec. 31 among $22 billion in assets.

McDonald's, which now owns 65 percent of Chipotle, should sell the rest of the Mexican fast food chain, activist investor William Ackman told analysts in January.

Ackman also urged the company to provide more information about the margins of its company-owned restaurants, which lag franchisee stores in profitability. The company ceded to Ackman's demand in its February 10-K securities filing and also moved in January to license 1,500 company-owned restaurants to independent operators and buy back $1 billion in shares.

Ackman, whose hedge fund Pershing Square Capital Management LP owns McDonald's shares, dropped his campaign for a public offering of all company-owned restaurants.

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina at cburritt@bloomberg.net.

Last Updated: April 13, 2006 16:19 EDT