Yum profit beats street, shares fall on outlook

LOS ANGELES (Reuters) - Yum Brands Inc (YUM.N), operator of the KFC, Taco Bell and Pizza Hut fast-food chains, posted a quarterly profit on Monday that beat Wall Street's target, but its shares fell 2.3 percent after the company's boosted 2008 earnings per share forecast was short of analyst's target.

Investors have been jittery about the growth potential of budget-oriented fast-food purveyors as a downturn in U.S. consumer spending is making it difficult for companies to raise prices to make up for higher food and labor costs.

Net income at Louisville, Kentucky-based Yum was $231 million, or 44 cents per share to beat Wall Street's average call for per share earnings of 42 cents, according to Reuters Estimates.

The result compared with Yum's year-earlier quarterly net income of $232 million, or 42 cents per share. Share buybacks reduced dilution in the most recent quarter, raising Yum's earnings per share results.

Yum also said it plans to return more than $2 billion to shareholders through dividends and share buybacks.

Revenue rose 8 percent to $3.26 billion, topping analyst's average call for sales of $3.16 billion.

Worldwide same-store sales grew 4 percent, including 17 percent growth in mainland China, 5 percent in Yum Restaurants International, which excludes China, and 1 percent in the United States.

The company raised its full-year forecast for 2008 earnings per share, excluding one-time gains, to $1.85 per share, or at least 10 percent growth, from $1.82 per share.

The company said in December it was looking for earnings- per-share growth of at least 10 percent in 2008.

Analysts polled by Reuters Estimates were looking for full-year earnings excluding items of $1.86 for the quarter.

The company, which has more than 34,000 restaurants worldwide, has a track record of meeting or beating Wall Street's targets.

The company's shares, which were up 20 percent from a year ago on a split-adjusted basis, fell to $35 from its close of $35.81 in after-hours trading on the New York Stock Exchange.

(Reporting by Lisa Baertlein; Editing by Andre Grenon)