Tags: yum | restaurant | china | earn

China Weakness Dulls Sheen on Yum's Profit Report

Wednesday, 18 Apr 2012 04:55 PM

KFC parent Yum Brands Inc posted first-quarter earnings that topped Wall Street's view but shares slipped more than 1 percent after sales at established restaurants in its key China market grew 14 percent, slightly less than analysts expected.

Expectations were high going into the quarter despite a slight cooling in economic growth in China, which accounts for just over 40 percent of Yum's overall profits.

Yum's net income for the first quarter, ended March 24, rose to $458 million, or 96 cents per share, compared with $264 million, or 54 cents per share, a year earlier.

Excluding special items, Yum earned 76 cents per share in the latest quarter, topping analysts' average target by 3 cents per share, according to Thomson Reuters I/B/E/S.

Investors have been jittery about a potential slowdown and hard landing in China -- the world's fastest-growing major economy -- where first-quarter gross domestic product growth slowed to 8.1 percent, the most lackluster increase in nearly three years.

Yum's 14 percent first-quarter same-restaurant sales gain in China was a strong number, but fell short of analysts' average call for a rise of 14.6 percent, according to Consensus Metrix.

Same-restaurant sales from the United States were up 5 percent, boosted by brisk sales of Taco Bell's new Doritos Locos Tacos. Analysts had expected a rise of 2.2 percent.

Results from Yum Restaurants International (YRI), which includes Japan, Russia and France, also gained 5 percent, better than analysts' call for a 2.8 percent rise.

Shares in Yum, which have gained 45 percent over the last 12 months, slipped 1.3 percent to $72 in extended trading.

© 2017 Thomson/Reuters. All rights reserved.

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