Yum Rides China Recovery -- WSJ
April 21 2016 - 3:03AM
Dow Jones News
Profit rises amid continued signs of rebound; firm boosts growth
projections
By Maria Armental
Yum Brands Inc.'s profit rose in the March quarter as its China
business continued to show signs of recovery, posting its third
consecutive quarterly increase in a key sales metric.
Citing the results, the Louisville, Ky., company raised its
projections for growth in core operating profit to 12%, adjusted
for currency conversions, from its previous target of a 10%
improvement.
Shares, up 2% over the past 12 months, rose 4% to $85.80 in
after-hours trading.
The China business, which accounts for about half of the
company's revenue and that Yum plans to spin off by year's end,
reported an 11% system sales increase, adjusted for currency
conversions, and a 6% increase at restaurants open for at least a
year, the third consecutive quarterly increase. Restaurant margin,
meanwhile, improved 3.5 percentage points to 22.4%.
In addition to planning to spin off the once fast-growing
business, which had weakened by food-safety scares and stiffer
competition, Yum is considering selling a stake in the business,
The Wall Street Journal reported last month, citing people familiar
with the situation.
As part of the planned spinoff, Yum has pledged to return $6.2
billion to shareholders before the separation is complete.
Yum was the first major Western fast-food company in China,
opening a KFC near Beijing's Tiananmen Square in 1987 and building
the brand into the largest foreign-restaurant chain in the
country.
Over all, for the period ended March 19, Yum reported a profit
of $391 million, or 93 cents a share, compared with $362 million,
or 81 cents a share. Excluding certain items, including costs tied
to the planned separation of the China business, profit rose to 95
cents a share from 80 cents a year earlier.
Revenue, which includes franchise and license fees, eased 0.1%
to $2.62 billion.
Analysts surveyed by Thomson Reuters had projected 83 cents a
share on $2.65 billion in revenue.
System sales at KFC rose 5% in the latest quarter, also adjusted
for currency conversions, while Taco Bell reported a 3% increase
and Pizza Hut a 4% increase.
Company sales declined 7% at KFC division, 3% at Taco Bell and
8% at Pizza Hut.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
April 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Yum Brands (NYSE:YUM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Yum Brands (NYSE:YUM)
Historical Stock Chart
From Apr 2023 to Apr 2024