Yum warns on 2013 earnings as chicken scare hurts KFC

(REUTERS) - KFC parent, Yum Brands Inc, on Monday warned that it expects 2013 earnings to shrink rather than grow, as it grapples with a food safety scare that ensnared some of its chicken suppliers in its top market, and shares fell more than 6 per cent.

The company, which gets more than half of its overall sales and operating profit from China, reported a 6 per cent drop in fourth-quarter sales at established restaurants in China due to "adverse publicity" regarding its poultry supply.

Its business there continued to suffer in January, when China same-store sales dropped 37 per cent, including a 41 per cent fall for KFC and a 15 per cent decline for Pizza Hut Casual Dining.

As a result, Yum forecast a "mid-single digit" percentage decline in earnings per share for 2013. Yum previously forecast 2013 earnings per share growth of at least 10 per cent.