KFC parent Yum lowers sales view

By Lisa Baertlein

LOS ANGELES (Reuters) - Yum Brands (YUM.N), parent of the Taco Bell, Pizza Hut and KFC chains, cut its full-year forecast for sales on weakness in its two biggest markets, the United States and China, and its shares fell 3.9 percent.

The company, which also posted a profit that topped Wall Street's view but did not raise its full-year earnings outlook to reflect the beat, said it now expects 2009 same-stores sales in mainland China to be "about flat" versus up 5 percent.

It sees U.S. same-store sales "down slightly" versus its prior call for a gain of 3 percent. And, it trimmed its forecast for same-restaurant sales in other international markets, pegging growth at 3 percent versus growth of 3 to 5 percent.

Louisville, Kentucky-based Yum gets more than half of its operating profit from China and other overseas businesses and investors expect most of Yum's future growth to come from those markets.

Second-quarter net income rose to $303 million (185.5 million pounds), or 63 cents per share, for the quarter ended June 13, compared with net income of $224 million, or 45 cents per share, a year earlier. The company previously had said that the second quarter would likely be its most challenging and a low point for the year.

Profit excluding special items was 50 cents per share, handily topping analysts call for earnings of 43 cents per share, according to Reuters Estimates.

The company's effective tax rate fell to 12.8 percent from 14.9 percent in the year ago quarter.

Total revenue fell to $2.48 billion from $2.66 billion.