Los Angeles, April 22 - Yum Brands Inc, operator of the KFC, Taco Bell and Pizza Hut fast-food chains, posted a bigger-than-expected 31 percent jump in quarterly profit on Tuesday, fueled by growth in China, and raised its full-year forecast.
The company also posted growth at established restaurants in the United States, reversing year-earlier declines.
"They're doing incredibly well in China ... It looks like they're turning the corner in the U.S., at least from a sales perspective," Morningstar restaurant analyst John Owens said.
"All in all, it was a very strong result," he said.
Louisville, Kentucky-based Yum said first-quarter net income rose to $254 million, or 50 cents per share, from $194 million, or 35 cents per share, a year earlier.
Excluding a gain of 8 cents per share from the sale of its minority interest in KFC Japan and other items, the per-share profit was 42 cents. Analysts, on average, looked for 40 cents, according to Reuters Estimates.
Total revenue rose to $2.4 billion from $2.2 billion.
Worldwide sales at stores open at least a year were up 4 percent overall. Sales from mainland China were up 12 percent, while the other international businesses posted 5 percent growth, and the United States rose 3 percent.
While investors have grown accustomed to the strong international growth, they have pressured the company to improve domestic results, where operating margins declined slightly due to higher costs for cheese, wheat and chicken.
"While our U.S. profits are being challenged by significant commodity pressure ... we remain confident in the steps we are taking to position the U.S. brands for sustainable growth," Chief Executive David Novak said in a statement.
Morningstar's Owens said the 3 percent domestic same-store sales growth was encouraging, suggesting Yum is moving beyond last year's bad publicity surrounding Taco Bell's link to an E. coli outbreak and a rat infestation at a Taco Bell/KFC unit that has since been closed.
Yum raised its forecast for 2008 per-share earnings to $1.87 from $1.85, excluding special items that would boost results by 6 cents per share.
Yum will hold a conference call with analysts on Wednesday morning, and analysts will listen for details about the company's domestic roll-out of pasta at Pizza Hut, grilled chicken at KFC and new breakfast and beverage items at Taco Bell.
U.S. consumers have been cautious as the economy has faltered and prices for necessities like gas and food have risen.
Yum shares, which rose then fell following the earnings report, were slightly higher at $38.65 in after-hours trading, after closing down 1.5 percent to $38.49 on the New York Stock Exchange.