LOS ANGELES - Yum Brands Inc, the parent of Taco Bell, Pizza Hut and KFC, on Tuesday posted a quarterly profit that topped Wall Street's target, but shares fell 1.8 percent on slowing sales growth in China.
Yum generates 60 percent of its operating profit from China and other overseas businesses. Those markets had sheltered Yum and companies like rival McDonald's Corp from the US recession for most of 2008, but have recently shown weakness in a global slowdown.
"Probably it's the (same-store sales comparison) in China that's spooking people ... I think analysts had expected probably a little higher number," said Edward Jones analyst Jack Russo. "You had to expect some slowing since there is economic slowing going on in that market."
Yum said fourth-quarter same-store sales in China were up just 1 percent compared with year-earlier growth of 17 percent. Same-store sales were up 5 percent for Yum's international unit and up 2 percent for the United States.
The company said fourth-quarter net income fell to $204 million, or 43 cents per share, compared with net income of $231 million, or 44 cents per share, a year earlier.
Profit excluding special items was 46 cents per share, topping analysts' average forecast of earnings of 45 cents, according to Reuters Estimates.
Total revenue rose to $3.38 billion from $3.26 billion.
The company said it expects earnings excluding special items to decline in the first quarter of 2009. For the full year, it expects earnings per share of $2.10, excluding items.
That is 2 cents above analysts' average forecast of $2.08 for 2009.
Executives for Louisville, Kentucky-based Yum are scheduled to discuss results with analysts during a conference call on Wednesday.
Shares in Yum fell to $27.75 in extended trading from their close of $28.27 on the New York Stock Exchange.