McDonald's reported an expected drop in first-quarter earnings as sales of its hamburgers in Europe continued to suffer from the fallout over BSE and foot and mouth disease.

Income in the period fell to US$378.3m from US$450.9m a year ago. Sales at the fastfood giant, which include both company-owned and franchised stores, rose to US$9.65bn from US$9.51bn a year ago. Sales in Europe, which account for about one-fourth of McDonald's total, fell 6% to US$2.18bn from US$2.31 bn. The profit decline is the second consecutive quarterly drop for McDonald's.

McDonald's though are optimistic that sales and profits will improve. In a statement, Chairman and Chief Executive Jack Greenberg said, "In Europe, we are optimistic that lingering concerns about beef will continue to lessen as the year progresses." Greenberg added that comparable-store sales trends in March improved in several key European markets.