Yum Profits Up on Strong Fast-Food Sales

Yum Brands Inc. (YUM) Tuesday said quarterly earnings rose 13 percent and raised its profit forecast for the year as strong sales at its fast-food chains helped offset a run-up in commodity costs.

Yum, which owns the Taco Bell (search), Pizza Hut (search), and KFC (search) restaurant chains, reported a net profit of $185 million, or 61 cents a share, for its third quarter ended Sept. 4, compared with $164 million, or 53 cents a share, a year ago.

Wall Street analysts, on average, had expected the company to report earnings of 60 cents per share, according to Reuters Estimates.

Louisville, Ky.-based Yum also raised its full-year earnings outlook by 2 cents a share to $2.35 before special items. Analysts are expecting earnings of $2.34 per share, according to Reuters Estimates.

In a statement, Yum Chief Executive David Novak cited strength in the company's international business, particularly in China, as well as robust sales at Taco Bell and Pizza Hut in the United States, for the raised view.

Yum last month reported better-than-expected sales at its U.S. restaurants open at least a year and said the strength would offset higher costs on key food ingredients like meat and cheese. The increase in commodity prices has stretched margins at many restaurant companies in recent months, though prices have moderated from the historic highs earlier this year.

Yum shares rose 63 cents, or 1.5 percent, to close at $41.50 Tuesday on the New York Stock Exchange.