TOKYO (Reuters) - McDonald's Holdings Co (Japan) Ltd (>> McDonald's Holdings Company (Japan), Ltd) replaced on Tuesday the president and CEO of its operating company after its first-half sales and profits dropped as higher prices put off customers.

Sarah Casanova, a Canadian who has worked in McDonald's Corp (>> McDonald's Corporation) for 22 years, will take over from Eiko Harada, who served as president, chairman and CEO of the holding company and the operating unit since 2005, the company said in a statement.

Casanova's appointment is an effort to bring in new managerial talent, Harada said in the statement.

McDonald's Japan is 49.9 percent owned by McDonald's Corp.

Higher input costs due to the weaker yen drove McDonalds Japan to raise the prices on some burgers this year while some Japanese chains cut their prices and convenience stores increased their prepared food offerings.

The company cut its full-year sales and profit targets after operating profits dropped more than 40 percent and sales fell 11.4 percent in the first half, largely due to a decline in promotions and discounts.

In July, McDonalds Japan introduced a 1,000 yen ($10) limited-edition quarter pounder to attract business, but customer numbers fell 9.5 percent compared to the same month a year ago.

McDonald's Japan shares have fallen nearly 7 percent since it reported its first-half earnings on August 9. Shares have gained about 16 percent during a stock market rally that began last November and which lifted the benchmark Nikkei average <.N225> by 56 percent.

($1 = 98.5350 Japanese yen)

(Reporting by Ritsuko Shimizu; Writing by Edmund Klamann; Editing by Miral Fahmy)