WASHINGTON (dpa-AFX) - Restaurant chain Yum! Brands Inc. (YUM), Tuesday reported a 23 percent jump in third quarter profit on strong growth at its key China division. Sales at its U.S. division slackened, but was offset by expanded margin. Yum! Brands' quarterly earnings came in ahead of Street estimates, while sales fell short of expectations.
The company also raised its outlook for the full year and now expects adjusted earnings per share growth of at least 13 percent. Yum! Brands shares are currently gaining over 4 percent in after-hours trade on the New York Stock Exchange.
Yum! Brands' strong show in China, which accounts for more than half of its business, comes amid concerns that cooling economic conditions may have impacted its fortunes there. While such fears were dispelled, sales at U.S. and International Division saw declines.
Yum! Brands, which recorded lower profit in China in the prior quarter, sees the region as a bulwark even as it faced with lower sales elsewhere. Nonetheless, competition is rife with the presence of other global chains, who also grapple with tough market environment.
The parent company of the Taco Bell, Pizza Hut and KFC chains, reported a 9 percent increase in total revenues for the third quarter, compared to last year.
China division revenues for the quarter jumped 24 percent, with same-store sales increasing 6 percent, and operating profit up 24 percent. The division opened 192 new units during the quarter and expects to open at least 750 new units this year.
U.S. division sales fell 10 percent. Same-store sales at the division grew 6 percent as key chains saw growth, and operating profit rose 13 percent.
International division revenues edged down 1 percent, while operating profit improved 7 percent.
Yum! Brands also saw growth at its India division, where sales increased 29 percent, prior to foreign currency translation, driven by double-digit unit growth and same-store sales growth of 5 percent.
Louisville, Kentucky-based Yum! Brands reported third quarter net income of $471 million or $1.00 per share, compared to $383 million or $0.80 per share last year.
Excluding items, adjusted earnings for the quarter were $0.99 per share, compared to $0.83 per share in the prior year.
On average, 21 analysts expected the company to earn $0.97 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter grew to $3.57 billion from $3.27 billion a year ago. Nineteen analysts had a consensus revenue estimate of $3.64 billion for the quarter.
For the full year 2012, Yum! Brands now estimates adjusted earnings of at least $3.24 per share, up from prior guidance of $3.22 per share.
Analysts polled by Thomson Reuters currently expect the company to earn $3.26 per share for the full year.
The company anticipates a pre-tax non-cash charge of $25 million to $75 million in the fourth quarter related to early payout of pension benefit. The actual amount will depend on the number of participants opting for it.
Shares of Yum! Brands closed Tuesday at $66.03, down 1.36%, on a volume of 4.4 million shares. In after hours, the stock gained $2.76 or 4.18%. In the past year, the stock traded in a range of $50.60 - $74.44.
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