Yum 1Q Profit Up 73% On Continued Strength In China, US

Date : 04/18/2012 @ 5:07PM
Source : Dow Jones News
Stock : Yum! Brands, Inc. (YUM)
Quote : 72.09  -0.04 (-0.06%) @ 4:02PM

Yum 1Q Profit Up 73% On Continued Strength In China, US

Yum (NYSE:YUM)
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Yum Brands Inc.'s (YUM) first-quarter earnings improved a better-than-expected 73% as results for the fast-food chain continued to benefit from strong growth in China, as well as improvements in the U.S.

The parent company of Taco Bell, KFC and Pizza Hut has staked much of its future on emerging markets, especially China, where its Pizza Hut and KFC chains are booming in urban areas. China's rising food and labor costs, as well as signs of an economic slowdown, have put Yum at risk of losing its overseas edge. But robust same-store sales growth there in the fourth quarter proved momentum remains.

For the first quarter, China continued to post double-digit same-store sales growth, up 14%, while operating profit rose 14% prior to currency changes.

In November, Yum said it is separating its India business into its own standalone segment, a strong indication of its interest in expansion there, given that the only other international market it breaks out is China.

Yum's domestic business has struggled, appearing to take a backseat to its international efforts. But though it sold off two smaller domestic chains last year, Yum has said it expects to make a comeback in the U.S. this year, with Taco Bell undergoing a major revamp and Pizza Hut showing same-store sales growing at year's end.

U.S. same-store sales growth in the latest period rose 5% as operating earnings were 27% higher.

Yum posted a profit of $458 million, or 96 cents a share, up from $264 million, or 54 cents a share, a year earlier. Excluding special items, earnings rose to 76 cents from 63 cents. Revenue increased 13% to $2.74 billion.

Analysts polled by Thomson Reuters expected a profit of 73 cents a share on revenue of $2.7 billion.

World-wide restaurant margin improved 1.2 percentage points to 18.6% for the quarter.

Shares closed Wednesday at $72.94 and were down 1.3% after hours. Through the close, the stock was up 24% so far this year.

-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; ben.rubin@dowjones.com

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