LOS ANGELES – Yum Brands Inc. (YUM), parent of the KFC, Taco Bell and Pizza Hut restaurant chains, Thursday forecast 2006 earnings in line with Wall Street expectations and said sales in China were being hurt by consumer concerns about a deadly bird flu.
Yum also said it will no longer give quarterly earnings per share forecasts because of volatile income tax rates and the timing of refranchising deals.
The company made the announcement ahead of an analyst meeting in New York Tuesday.
Yum reported a 1 percent drop in November sales in China. After conversion to U.S. dollars, the fast-growing unit posted a 1 percent sales increase.
The company has a long-term goal of posting roughly 20 percent sales increases in China.
Sales in China have been slow to recover since a food safety scare earlier this year hampered customer visits to the company's KFC chain. A bird flu that has infected 133 people in Asia and killed 68 is also weighing on sales, though there is no evidence properly cooked poultry is a source of infection.
"Recent confusion and fear regarding the avian flu will likely make this recovery take even longer," Banc of America Securities analyst Andrew Barish said in a note to clients.
In the United States, sales at Yum restaurants open at least a year rose 6 percent as business at KFC and Taco Bell exceeded several analysts' estimates. At Pizza Hut, same-store sales dropped 3 percent during the four-week period as the chain faces stiff competition from rivals.
In Yum's international division, which excludes China, sales rose 3 percent in both U.S. dollars and local currencies. Barish said the performance was below his expectations as Yum faces challenges in Europe.
Yum backed its forecast of 78 cents a share for the fourth quarter and $2.64 a share for the year, before special items.
Profit in 2006 is expected to be at least $2.90 a share, excluding items, in line with Wall Street's average forecast, according to Reuters Estimates.
The company forecast 2006 worldwide sales growth of 5 percent to 6 percent and said U.S. same-store sales at company-owned restaurants are expected to rise 2 to 3 percent.
Total revenue is expected to grow at a rate of 4 percent to 5 percent next year, the Louisville, Kentucky-based company said in a statement.
The company expects at least 1,500 new system restaurants to be opened worldwide in 2006, including 400 in China.
Yum shares were up 6 cents at $48.85 Thursday on the New York Stock Exchange.