April 22 (Bloomberg) -- McDonald's Corp., the world's largest restaurant company, said first-quarter profit rose more than analysts estimated after record European revenue gains outweighed the first drop in U.S. comparable-store sales in five years.

The maker of the Big Mac sold more coffee in the U.K., Big Tasty burgers in France and Shaka Shaka chicken sandwiches in Japan, signaling overseas markets will outperform the U.S. for the third straight year, UBS Securities LLC said. The dollar's decline also added to profit.

U.S. sales at stores open at least 13 months fell 0.8 percent in March, McDonald's said today in a regulatory filing. The first decline since March 2003 occurred as consumers pinched by rising fuel costs and sinking home values cut spending.

``The company isn't recession-proof, but it is somewhat recession-resistant,'' Dean Kartsonas, who helps manage $338.5 billion in assets for Federated Investors in Pittsburgh, said today in a Bloomberg Television interview. Federated owned 1.2 million McDonald's shares through December.

McDonald's shed 32 cents to $58.35 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has declined less than 1 percent this year after five straight annual gains.

Net income advanced 24 percent to $946.1 million, or 81 cents a share, from $762.4 million, or 62 cents, a year earlier, the Oak Brook, Illinois-based company said today in a statement. The dollar's decline boosted profit by 5 cents a share. Revenue increased 6.1 percent to $5.61 billion.

Analysts' Estimates

Analysts surveyed by Bloomberg estimated McDonald's would earn average profit of 70 cents. They projected revenue of $5.44 billion. The chain runs more than 31,000 restaurants in 118 countries.

The restaurant company said it expects U.S. same-store sales to recover in April with a gain of 2 percent to 2.5 percent.

``I like where McDonald's is going,'' Steve West, a Stifel, Nicolaus & Co. analyst in St. Louis, said today in a Bloomberg Television interview. The March sales decline was ``a little bit of a chink in the armor since it's been five years since we've seen this from McDonald's.'' He recommends investors buy the shares.

McDonald's projects higher sales gains overseas, with Europe rising 5.5 percent to 6.5 percent and the region encompassing Asia, the Pacific, the Middle East and Africa advancing 6.5 to 7.5 percent.

European Results

Same-store sales at European restaurants jumped 11 percent in the quarter, spurred by breakfast foods in the U.K., small chicken sandwiches in France and cheeseburgers in Germany, Heidi Barker, a McDonald's spokeswoman, said today in an interview.

Europe is the company's largest region by revenue, generating 42 percent of first-quarter sales and 39 percent of operating profit, McDonald's said in the filing. The U.S. contributed 47 percent of earnings and 34 percent of sales.

A Big Mac cost 3 euros ($4.80) in downtown Amsterdam today. In Brooklyn, New York, customers paid $3.29 for the hamburger.

The U.S. currency touched a record $1.6019 in New York trading today against the euro and has depreciated 8.7 percent this year.

Same-store sales in the region that encompasses Asia, the Middle East and Africa increased 9.4 percent as outlets extended hours and sold more burgers and chicken sandwiches, Barker said.

``There is a lot of energy in the McDonald's system,'' David Palmer, a UBS analyst in New York, wrote today in a note to clients. He recommends buying the stock.

Capital Spending

McDonald's said it plans $2 billion in capital spending in 2008 and expects to open 1,000 restaurants. New locations are planned in China and Russia, executives said on a conference call today.

The March drop in U.S. same-store sales missed a median estimate of a 1 percent gain by five analysts surveyed by Bloomberg News. Consumers worried about their jobs and facing the deepest housing slump in at least a quarter century have cut back on trips to restaurants.

U.S. sales were unchanged in December and rose 1.9 percent in January and 8.3 percent in February, helped by an extra day for the leap year.

Chicken costs in the U.S. may rise 6 percent, while beef costs may remain unchanged, executives said.

New Coffees

Adding new coffees will spur U.S. sales in the second half of the year, John Glass, a Morgan Stanley analyst in New York, wrote today in a note. He rates the stock as ``overweight.''

McDonald's has added iced coffees to 10,000 of its almost 14,000 U.S. restaurants, where it plans to install counters selling cappuccino and lattes through 2009. The chain started selling a stronger coffee blend in 2006 to capture sales from Starbucks Corp.

The hamburger chain turned sales around in April 2003 with a discount menu selling double cheeseburgers for $1. It coupled lower-priced foods with healthier salads and chicken sandwiches, longer hours and restaurant renovations to spur almost five years of higher sales.

The average U.S. pump price for regular gasoline rose 11.9 cents to a record $3.508 a gallon in the week ended yesterday, the U.S. Energy Department said.

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

Last Updated: April 22, 2008 16:05 EDT