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Yum's China sales fall less than expected, shares rise

A customer walks past a KFC store in Shanghai July 22, 2014. REUTERS/Aly Song

By Lisa Baertlein

(Reuters) - Yum Brands Inc (YUM.N) on Wednesday reported a decline in fourth-quarter sales at established restaurants in China that was less than feared as the company fights to recover from a safety scandal involving a minor supplier, and its shares jumped 2.5 percent.

Sales at established restaurants in China, Yum's No. 1 market for revenue and profit, fell 16 percent in the fourth quarter ended Dec. 27 on continued fallout from allegations that a former supplier used expired meat.

But the decline was less severe than the 19.4 percent drop expected by analysts polled by Consensus Metrix.

The company's same-restaurant sales in China had fallen 14 percent in the third quarter ended Sept. 6. They had risen 15 percent in the second quarter, which ended roughly a month before news of the supplier scandal broke on July 20.

"While the sales recovery in China continues to be slower than expected, we anticipate a strong second half of 2015 as the turnaround gains momentum," Yum Chief Executive Greg Creed said in a statement.

Shares in Yum, which were trading at $77.42 on July 18 before the China supplier scandal broke, rose $1.85 to $75.50 in extended trading.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Leslie Adler)