Burger King Holdings Inc said on Monday it expects unfavorable foreign exchange rates, primarily related to the euro, to reduce earnings for the current quarter by 1 to 2 cents per share.

The pressure on earnings is coming from a basket of foreign currencies but the euro is having the most significant impact, R.W. Baird analyst David Tarantino told Reuters.

Germany, Europe's largest economy, was the only international market to account for 10 percent or more of Burger King's total revenue during the fiscal third quarter, which ended March 31.

During the third quarter, the United States and Canada contributed revenue of $407.1 million, while the Asia-Pacific and Europe, Middle East and Africa regions kicked in $163.8 million and Latin America contributed $26 million.

For the full fiscal year, which ends on June 30, Burger King said it expects currency exchange to have a neutral to slightly negative influence on results.

The Miami-based company, known for its Whopper hamburgers, previously said it expected currency translation to benefit fourth-quarter results and to have a slightly positive impact on all of fiscal 2010.

Our model had assumed a drag of half a cent in Q4, Tarantino said.

Even with slightly lower estimates, we still consider (Burger King) a good value, said Tarantino, who cut his fourth-quarter earnings per share estimate by 1 cent to 34 cents and his fiscal 2011 estimate by 2 cents to $1.45.

Burger King shares are down almost 1 percent so far this year, compared with the 8 percent gain in McDonald's shares and the more than 11 percent rise in the Dow Jones U.S. Restaurant and Bars index <.DJUSRU>.

Burger King, the second-largest hamburger chain after McDonald's Corp , also lowered its net restaurant growth target to 230 to 250 from 250 to 300 outlets previously, due to its exit from Israel, where it had 55 restaurants.

Shares were down 0.3 percent, or 5 cents, to $18.67 on the on the New York Stock Exchange.

(Reporting by Lisa Baertlein, additional reporting by Shobhana Chadha in Bangalore; Editing by Dave Zimmerman and Steve Orlofsky)

Germany Israel Canada