Yum Brands Inc on Wednesday posted an unexpected decline in quarterly sales at established China restaurants, citing protests sparked by an international court's rejection of the country's claim to historic rights in the South China Sea.

Shares in Yum, which will spin off its China restaurants on Oct. 31, fell 2.2 per cent to US$86.71 in after-hours trading.

The owner of the KFC, Pizza Hut and Taco Bell brands said sales at Yum China restaurants open at least one year fell 1 per cent during the fiscal third quarter ended Sept. 3.

Analysts polled by research firm Consensus Metrix had expected a 4.1 per cent sales gain for the China unit, which is Yum's top profit driver.

Sales at established restaurants in China were flat in the second quarter after rising 6 per cent in the first quarter, the company said in a statement.

In July, an international tribunal in The Hague ruled in favor of the Philippines in a landmark case, finding that China had violated international law in the South China Sea.

Yum, the biggest Western restaurant operator in China, said that ruling triggered regional protests against a few multinational companies with well-known Western brands.

"If not for this event, we believe the China Division would have delivered its fifth consecutive quarter of positive same-store sales growth," Yum said. The impact dissipated through August and September, it added.

Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding Ltd said in September they would buy a stake in Yum China for US$460 million.

Yum's China business will begin trading as a separate company on Nov. 1 on the New York Stock Exchange under the ticker symbol YUMC.

Yum's net income jumped 48 per cent to US$622 million, or US$1.56 per share, helped by lower taxes, gains from selling restaurants to franchisees, lower food and paper costs and other items.

Total revenue fell 3 per cent to US$3.32 billion for the third quarter.

The Pizza Hut division underperformed expectations, posting a same-store sales decline of 1 per cent. Taco Bell and KFC, excluding China, beat estimates with growth of 3 per cent and 4 per cent, respectively