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Yum Brands Storms Back in China

28 April 2014

GLOBAL - Yum Brands that includes KFC, Pizza Hut and Taco Bell has seen worldwide system sales grow by four per cent in the first quarter of the year.

Worldwide restaurant margin increased by 3.3 percentage points to 19.2 per cent and worldwide operating profit increased 22 per cent.

China Division has seen a resurgence after recent difficulties with a sales increase of 17 per cent, driven by seven per cent unit growth and nine per cent same-store sales growth.

Restaurant margin increased 6.8 percentage points to 23.4 per cent. Operating profit increased 80 per cent.

Total international development was 249 new restaurants with 86 per cent of this development occurred in emerging markets.

KFC Division sales increased by four per cent, driven by two per cent unit growth and one per cent same-store sales growth.

Restaurant margin decreased 0.3 percentage points to 12.9 per cent.

Operating profit increased by four per cent.

Pizza Hut Division sales were even, as two per cent unit growth was offset by a two per cent same-store sales decline.

Restaurant margin decreased 4.2 percentage points to 10.8 per cent. Operating profit decreased 14 per cent.

Taco Bell Division system sales were even, as one per cent unit growth was offset by a one per cent same-store sales decline.

Restaurant margin decreased 2.6 percentage points to 15.6 per cent. Operating profit decreased 16 per cent.

India Division system sales increased 21 per cent, driven by 25 per cent unit growth which was partially offset by a 1 per cent same-store sales decline. Operating profit declined $1 million.

David C. Novak, Chairman and CEO said: “Yum! Brands is clearly on its way to a strong bounce-back year delivering first-quarter EPS growth of 24 per cent.

“Operating profit grew 80 per cent in China, prior to foreign currency translation, driven by strong sales and margin growth. Looking ahead, we have significant building blocks in place in China and each of our divisions to drive sales and profit growth this year and beyond.

“China Division system sales increased 17 per cent and restaurant margins were 23.4 per cent. Importantly, KFC results continued to improve with an 11 per cent same-store sales increase in the quarter.

“We are building off this sales momentum and are encouraged by our recent Menu Revamp, which features the simultaneous launch of 15 exciting products. At Pizza Hut Casual Dining, we had strong performance across every measure. Given the strength at both KFC and Pizza Hut, we expect to open at least 700 new restaurants in China this year as we further capitalize on our leading position in the number-one retail opportunity in the world.

“Outside of China, we’re on our way to opening a record 1,250 new international units this year. These new units further strengthen our lead in emerging markets where we continue to have positive momentum.

“We also delivered solid sales and profit performance in Russia and Africa, as well as developed markets like KFC in the U.K. and Australia.

“However, we experienced disappointing U.S. results, which were impacted by unusually severe weather. We have confidence in our plans to drive balance of year improvement and are particularly pleased with the initial results of our recent Taco Bell breakfast launch.

“In summary, Yum! Brands is off to a strong start this year. We expect to achieve EPS growth of at least 20 per cent in 2014 and look forward to re-establishing our track record of consistently delivering double-digit EPS growth in the years ahead.”

TheMeatSite News Desk



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