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Yum Brands Profit Jumps, Outpaces Street Forecasts

Yum Brandsreported a profit that outstripped Wall Street's forecasts Wednesday, as strong sales in China pushed earnings higher even as the company faced rising labor and food costs there.

A KFC restaurant in Boston.
Steven Senne
A KFC restaurant in Boston.

The operator of KFC, Taco Bell and other fast food chains said it earned 63 cents a share in the fourth quarter of 2010, excluding one-time items, compared with 50 cents a share last year.

Sales rose to $3.56 billion, from $3.365 billion.

The results topped analysts' estimates, which stood at a profit of 60 cents a share and revenue of $3.5 billion, according to Thomson Reuters.

The company's operating profit in the U.S., where it has struggled as recession-weary consumers remain at home more often to eat, rose 15 percent. And Pizza Hut's sales at U.S. restaurants open at least a year—a key barometer for restaurant performance—rose 10 percent. The figure also rose for Taco Bell and KFC.

Yum shares, which closed at $47.73 on the New York Stock Exchange , rose in late trade Wednesday. Get after-hour quotes for Yum Brands here.

Fourth-quarter net income at Yum, based in Louisville, Kentucky, was $274 million, or 56 cents per share, compared with $216 million, or 45 cents per share, a year earlier. Net income includes special items.

Chairman and CEO David C. Novak said 2010 was "perhaps our best year as a public company."

"As we enter 2011, we know that we face commodity inflation and a global economy that is still recovering," he said in a statement.

Yum now gets more than a third of its revenue from China, the world's fastest growing economy.

In its crucial China business, fourth-quarter operating profit rose 15 percent, adjusted for currency fluctuations; operating profit rose 18 percent in Yum's other international business. Across its U.S. operations, fourth-quarter operating profit rose 15 percent.

Yum recently announced that it is putting its Long John Silver's and A&W restaurant chains up for sale so it can focus on its growing international business.