KFC parent Yum says no bird flu hit to China sales

Mon Feb 3, 2014 5:53pm EST

A woman, wearing a mask, rides past a KFC restaurant in Shanghai April 11, 2013. REUTERS/Aly Song

A woman, wearing a mask, rides past a KFC restaurant in Shanghai April 11, 2013.

Credit: Reuters/Aly Song

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(Reuters) - KFC parent Yum Brands Inc on Monday reaffirmed its 2014 profit and said a resurgent bird flu in China had not hurt national sales in its top market.

Shares of Yum jumped 4.7 percent to $69.26 in after-hours trading.

Yum forecast earnings per share growth of at least 20 percent for 2014. Many analysts had worried that the recent return of bird flu, which helped hammer demand for chicken in China last year, would hit Yum's business hard.

"We're not seeing any impact on national sales from bird flu in China," Yum spokesman Jonathan Blum told Reuters.

Blum added that Yum is seeing "upward momentum" in its KFC China business, which was also pummeled by a food safety scare in late 2012.

China health authorities in January reported 127 laboratory-confirmed cases of human infection with the H7N9 avian flu virus from mainland China, according to the World Health Organization. The Xinhua News agency last week reported that the bird flu has killed 21 people in China so far this year.

Massive travel during the recent Chinese New Year holiday has fueled worries that many more people may become ill from the virus, and that it might mutate to become transmissible from person-to-person.

Shanghai's live poultry markets will be closed from the end of January through April 30 in an effort to lower the risk of the virus spreading. Other provinces in China also have temporarily banned live chicken sales.

The chief executive of Tyson Foods Inc last week said demand for chicken is down as much as 30 percent in China due to a softening economy, food safety scares and bird flu, resulting in "substantial oversupply". He added that concerns about a resurgence of avian flu could further dent demand.

PROFIT BEATS STREET

Yum executives will hold a conference call with analysts on Tuesday morning.

Yum earned $321 million, or 70 cents per share, for the fourth quarter, compared to $337 million, or 72 cents per share, a year earlier.

Excluding items related to its Little Sheep investment, retired debt and other factors, fourth-quarter earnings were 86 cents per share. That handily topped analysts' average forecast for a profit of 80 cents per share, according to Thomson Reuters

I/B/E/S.

China sales at established restaurants fell 4 percent during the fourth quarter. That result included an estimated decline of 4 percent at KFC and 5 percent growth at Pizza Hut Casual Dining.

The fast-food operator gets more than half of its overall sales in China, where most of its more than 6,200 restaurants are KFCs.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Bernard Orr)

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