McDonald's has invested heavily in new menus

The restaurant chain posted a profit of $126m (�70m) in the last quarter of 2003, compared with a $344m loss in the same period a year earlier.

The firm's profit would have been stronger, had it not spent heavily in revising its menus.

McDonald's is keen to shed its somewhat down-market, unhealthy image, which has seen its sales tumble in recent years.

Change of tack

In recent months, McDonald's has attempted to stress the healthier, fresher aspects of its products, and has launched its first global marketing campaigns.

Although the change of direction was greeted with scepticism by some, it seems to be paying off at the till.

McDonald's said that sales during the fourth quarter were up more than 16%, led by a strong rebound in the US.

Overseas, where the firm's image has come in for severe criticism in some places, the picture is more mixed.

But McDonald's says that a more intelligent approach to menus promises to turn things around even in the difficult European market.

McDonald's results, extensively trailed in a trading statement two weeks ago, were announced after the US markets closed.

Mad-cow fears

Going forward, one big question for the firm will be the impact of renewed mad-cow disease fears in the US.

These were not reflected in the latest results, and the firm said it planned no changes to its menus to take account of the scare.

But many investors hope the impact will be minimal.