July 22 (Bloomberg) -- McDonald's Corp., the world's largest restaurant company, may report a second-quarter profit after European sales rose twice as fast as in the U.S.

McDonald's probably earned $1.1 billion, or 95 cents a share, according to John Glass, a Morgan Stanley analyst. A year earlier, the Oak Brook, Illinois-based maker of Big Mac hamburgers lost $711.7 million, or 60 cents, because of costs to sell its Latin American restaurants.

Sales at European outlets open at least a year rose 6.5 percent in the quarter, UBS Securities Inc. analysts David Palmer and Michael Binetti estimated July 16. McDonald's sold higher-priced hamburgers in the U.K. and snack-sized chicken sandwiches in France, allowing Chief Executive Officer James Skinner to bolster profit in the region even as earnings growth in the U.S. waned.

``As U.S. growth has slowed, Europe has taken the lead with chicken sandwiches and other offerings that are enticing consumers,'' Janna Sampson, who helps manage $1.4 billion at Oakbrook Investments, said in an interview. The Lisle, Illinois- based firm owns 267,000 McDonald's shares.

Europe is McDonald's biggest region by revenue, generating 42 percent of sales in the first quarter and 39 percent of operating profit. Sales also benefited from the decline in the U.S. dollar, which dropped an average of 12 percent against a basket of six foreign currencies, increasing the value of overseas revenue when translated into the U.S. currency.

Stake Sale

Excluding a $150 million gain from the April sale of its stake in the Pret a Manger sandwich chain, McDonald's probably earned 86 cents a share, the average estimate of 15 analysts surveyed by Bloomberg.

Ten analysts estimated sales of $5.93 billion, 1.4 percent lower than the second quarter of 2007, reflecting the sale of the Latin American stores.

Skinner, 63, wasn't available for an interview, McDonald's spokeswoman Heidi Barker said yesterday. McDonald's reports results before the start of U.S. trading tomorrow.

McDonald's shares rose 37 cents to $60.12 at 4:10 p.m. in New York Stock Exchange composite trading. The stock has increased 2.1 percent this year, trailing only Darden Restaurant Inc.'s gain of 15 percent in the five-member Standard & Poor's 500 Restaurant Index. That index has fallen 3 percent since Dec. 31.

Higher Gasoline

Profit in the U.S. slowed as gasoline above $4 a gallon limited consumer spending. McDonald's has increased prices in the U.S., China and other markets this year in response to rising labor, chicken and delivery costs, while increasing domestic spending to advertise dollar cheeseburgers, iced coffee and sweet tea.

McDonald's last month raised prices by 2.7 percent in China, the second increase in 2008, Jeff Schwartz, CEO for the region, said in a June 25 interview. The higher prices covered fish sandwiches and Quarter Pounder and Big Mac hamburgers.

Chief Operating Officer Ralph Alvarez told reporters at McDonald's annual meeting in May that rising same-store sales and cost cuts are helping McDonald's counter soaring expenses.

Global comparable-store sales advanced 5 percent in the second quarter, according to the median estimate of analysts at UBS, Deutsche Bank Securities Inc. and Morgan Stanley. Growth slowed from 7.4 percent in the first quarter and 7.4 percent a year earlier.

Profitable Sales

In the U.S., McDonald's most profitable region, same-store sales increased 3 percent, the analysts estimated, compared with gains of 2.9 percent a quarter earlier and 5 percent in the second quarter of 2007.

McDonald's introduced new chicken sandwiches and biscuits in April in the U.S. to boost sales. It's competing with Burger King Holdings Corp. and Wendy's International Inc., which are also selling discount burgers and breakfast foods aimed at consumers pinched by rising fuel and grocery costs.

U.S. gasoline prices reached a record $4.11 a gallon July 17, 36 percent higher than a year earlier, according to the Web site of AAA, a Washington-based organization that sells travel insurance, roadside assistance and other services to motorists.

Prices for corn climbed to a record $7.9925 a bushel on June 27 because of concerns over tight supplies.

McDonald's started selling stronger coffee in 2006 to capture sales from Starbucks Corp. It's installing counters selling cappuccino and lattes through 2009.

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

Last Updated: July 22, 2008 16:11 EDT