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Earnings Preview: McDonald's to report 1Q Friday

NEW YORK (AP) -- McDonald's first-quarter results Friday should give investors a better sense of how the world's biggest hamburger chain is coping with volatile costs for ingredients in a struggling global economy.

WHAT TO WATCH FOR: Despite the fast food chain's success in recent years, CEO Jim Skinner noted that commodity costs continue to present a challenge; it was one of the reasons cited for the slightly lower profit margin at company-operated stores in the previous quarter.

McDonald's Corp. has said it expects costs for most of its commodities in the U.S. to increase 4.5 percent to 5.5 percent this year, which is roughly in line with last year's increase.

WHY IT MATTERS: Because of its size and scope, the decisions McDonald's makes about how to deal with rising costs can influence the rest of the fast-food industry. Last year, McDonald's raised menu prices three times, for a total price increase of about 3 percent. Chief Financial Officer Pete Bensen has said the company would continue to strategically make increases to offset some costs.

WHAT'S EXPECTED: Analysts on average expect earnings of $1.23 per share on revenue of $6.53 billion, according to FactSet.

LAST YEAR'S QUARTER: The Oak Brook, Ill.-based company reported net income of $1.15 per share on revenue of $6.1 billion.