April 22, 2014 / 9:42 PM / 5 years ago

Yum Brands' China restaurant sales improve, shares rise

(Reuters) - KFC parent Yum Brands Inc (YUM.N) on Tuesday said first-quarter sales at established restaurants in China, its top market, rose 9 percent as it recovers from an avian flu outbreak and a food safety scare that pummeled demand for chicken last year.

A view shows Yum Brands Inc's corporate headquarters in Louisville, Kentucky January 18, 2011. REUTERS/John Sommers II

Shares in the company, which gets more than half of its sales from China, rose 3.8 percent in after-hours trade to $80.40.

Yum’s restaurant sales in China included an increase of 11 percent at KFC and a rise of 8 percent at Pizza Hut Casual Dining.

Analysts polled by Consensus Metrix were expecting Yum’s China sales to rise 9.4 percent.

The fast-food operator gets more than half of its overall sales from China, where most of its more than 6,300 restaurants are KFCs.

In the first quarter of last year, China same-restaurant sales fell 20 percent, including a 24 percent drop at KFC and 2 percent decline at Pizza Hut Casual Dining.

The China division’s first quarter includes only January and February.

“Looking ahead, we have significant building blocks in place in China and each of our divisions to drive sales and profit growth this year and beyond,” David Novak, Yum’s chairman and chief executive, said in a statement.

China’s KFC first-quarter results got a boost from a crispy chicken promotion that featured contemporary Chinese celebrities, spokesman Jonathan Blum told Reuters.

Yum also has been revamping its product lineup to attract more diners. In late March, KFC changed its menus to include 15 items that were either completely new or formerly only available as limited-time offers.

Fast-food rival McDonald’s Corp (MCD.N) said earlier on Tuesday that its first-quarter same-restaurant sales in China were up 6.6 percent.

Yum also reported first-quarter net income of $399 million, or 89 cents per share, for the first quarter that ended March 22, compared with $337 million, or 74 cents per share, a year earlier.

The company, which will hold a conference call with financial analysts on Wednesday morning, also repeated its forecast for earnings per share growth of at least 20 percent in 2014.

Reporting by Lisa Baertlein in Los Angeles, editing by G Crosse and Gunna Dickson

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