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Yum lifts quarterly profit, outlook

*Yum shares closed higher by +1.16% on the Wednesday, October 5th session...

Yum lifts quarterly profit, outlook
Wednesday October 5, 1:21 pm ET

NEW YORK (Reuters) - Yum Brands Inc. (NYSE:YUM - News), owner of the KFC and Taco Bell fast-food chains, on Wednesday said third-quarter earnings rose nearly 16 percent on strong sales in the United States and growth overseas.

The company's third-quarter performance also helped boost its outlook for the full year.

"The company gave good earnings guidance for the rest of the year, while the group has been weak in the last couple of months," said Jonathan Waite, an analyst with KeyBanc Capital Markets.

Yum, whose shares rose 2 percent in afternoon trade, said net income rose to $214 million, or 72 cents a share, from $185 million, or 61 cents a share, a year earlier.

Excluding special items, the company earned 71 cents a share, a penny better than the average forecast among analysts polled by Reuters Estimates.

Revenue rose 3 percent to $2.24 billion, compared with analysts' average forecast of $2.25 billion.

GROWTH IN CHINA

For the fourth quarter, Yum forecast earnings of 78 cents a share, in line with Wall Street expectations.

The Louisville, Kentucky-based company raised its full-year earnings outlook by 2 cents a share, to $2.64 a share before special items, a penny higher than analysts' average estimate.

The Louisville, Kentucky-based company previously warned that earnings for the second half of the year would be hurt by taxes related to the repatriation of foreign earnings.

At Yum's fast-growing China business, 2005 sales are seen rising by at least 15 percent, while profit growth is seen at about 10 percent in local currency terms.

Earlier this year, Yum pulled some products from its KFC restaurants in China because they contained a dye banned from use in food due to concerns it could lead to an increased risk of cancer.

"We are making slow and steady improvement in China since the ingredient issue we had earlier this year," a Yum executive said during a conference call following the announcement.

Yum shares were up $1.07 to $49.34 in afternoon trade on the New York Stock Exchange.

The shares trade at about 18.8 times estimates 2005 earnings, compared with about 16.5 times for McDonald's Corp. (NYSE:MCD - News) and 21 times for Wendy's International Inc. (NYSE:WEN - News).

Yum shares have risen more than 5 percent in the past six months, compared with a decline of more than 1.6 percent for the S&P Restaurants Index (^15GSPREST - News).


LINK: http://biz.yahoo.com/rb/051005/leisure_yumbrands_earns.html?.v=6