YUM Brands Inc (YUM)

[zigzagman]

Analyst lowers 3Q profit estimates for Yum Brands

http://biz.yahoo.com/ap/080925/yum_brands_analyst_note.html?.v=1

Thursday September 25, 2:50 pm ET
JPMorgan analyst lowers 3rd-quarter profit estimates for Yum Brands, cites slower China sales

NEW YORK (AP) -- A JPMorgan analyst cut his third quarter profit estimates for Yum Brands Inc., which operates Taco Bell, KFC and Pizza Hut, saying sales in China will likely be lower than in the prior quarter.

Analyst John Ivankoe said in a note to investors that he now anticipates profit of about 52 cents per share, down from his prior estimate of 55 cents per share. Analysts surveyed by Thomson Reuters expect, on average, 54 cents per share for the third quarter.

He said he lowered his projection largely because of slower sales trends in China, which has emerged as a huge part of Yum's business.

Ivankoe said he believes same-store sales, or sales at locations open at least a year, will rise about 4 percent versus the 14 percent boost the company reported in its second quarter.

Ivankoe said the Olympics in China in August "disrupted consumer behavior" and "was a net negative." High commodity costs have also taken a bite out of operating profits in the country.

China has become a big growth engine for Yum, which has struggled lately in the U.S. KFC, in particular, is one of the most popular restaurants in China and has become part of the culture there with birthday parties and other events taking place there.

Ivankoe said the company should see more sales growth in its fourth quarter in China since the Olympics will not be a factor and menu prices are slated to be 1 percent to 2 percent higher.

Ivankoe has a "Neutral" rating on the shares.

Yum Brands shares fell 65 cents to $34.06 in afternoon trading.