Huffpost Food

Yum Brands Earnings: Q4 Profits Rise 30 Percent Due To Overseas Growth, Pizza Hut Sales Turnaround

Posted: Updated:

LOUISVILLE, Ky. -- Yum Brands Inc., owner of the Pizza Hut, Taco Bell and KFC fast-food chains, said Monday that its fourth-quarter profit rose 30 percent with a recipe of strong overseas growth mixed with a sales turnaround at Pizza Hut in the U.S.

The restaurant operator's revenue rose 15 percent to $4.1 billion. The results were slightly higher than analysts expected, and Yum's shares rose after hours.

Yum's global restaurant growth sped up in 2011 with the addition of 656 restaurants in China and 905 in the rest of its international markets. The company plans to keep up the pace in 2012, when it plans to open 1,500 new restaurants overseas, including about 600 in China.

Yum expects its earnings-per-share to grow at least 10 percent in 2012.

In the fourth quarter, its revenue from existing restaurants also rose, including a 1 percent gain in the U.S., a turnaround from the company's recent U.S. sales slump.

"The momentum is moving in the right direction," Yum spokesman Jonathan Blum said of the U.S. performance. "We're poised to have a good year in 2012."

Pizza Hut led the way with a 6 percent increase in revenue from established U.S. stores. The chain benefited from its $10 for any pizza deal and a promotion combining pizza, appetizers and bread sticks.

But the sales comparison fell 2 percent at Taco Bell, which had another sluggish quarter in the U.S.

The Mexican-style chain is still struggling to regain momentum after being stung by publicity last year from a now-dropped lawsuit that questioned the beef content of its taco and burrito filling. Taco Bell called the accusations false and is turning to breakfast and new products in seeking a turnaround. Taco Bell accounts for more than half of Yum's U.S. profit.

The chain plans to roll out tacos with Dorito-brand nacho cheese-flavored shells in March, and it recently started selling breakfast at nearly 1,000 restaurants mostly in the West, with hopes of taking its breakfast burritos and hash browns nationwide by 2014.

At KFC in the U.S., comparable sales fell 1 percent from a year earlier.

In China, fourth-quarter revenue at restaurants open at least a year rose 21 percent. The figure rose 3 percent in the division spanning the rest of Yum's international business.

Revenue reached $5.6 billion in China for the full year, up 35 percent from 2010.

"We are bullish on China going forward for many years to come," Blum said. "We don't see that slowing down."

The company is putting more emphasis on other emerging markets in places such as India, Russia and Africa.

"To put this in perspective, today we have fewer than two restaurants per million people in the top 10 emerging markets, compared to nearly 60 restaurants per million people in the U.S.," said Yum Chairman and CEO David C. Novak.

"Clearly, we have a very long runway for growth."

Yum, based in Louisville, Ky., earned $356 million, or 75 cents per share, for the quarter. That's compared with $274 million, or 56 cents per share, a year earlier.

Analysts expected profit of 74 cents per share on revenue of $4.04 billion.

The shares rose $1.58, or 2.5 percent, to $64.77 following the earnings report. They had ended regular trading down 65 cents at $63.19.

Outside China, Yum's profit benefited from the quarter being a week longer than it was last year. But its operating profit in China rose 15 percent, adjusted for currency fluctuations. In the international division, which excludes China, the company's operating profit rose 12 percent, adjusted for currency fluctuations. And, in the U.S., operating profit rose 10 percent.

Yum operates more than 37,000 restaurants in more than 110 countries and territories. The company recently sold its Long John Silver's and A&W All-American Restaurants brands.

all-also-on-huffpost

Suggest a correction

Around the Web

Yum! Brands - Defining Global Company that Feeds the World

Yum! Brands - Wikipedia, the free encyclopedia

YUM Stock Price Today - Yum! Brands Inc. Stock Quote - WSJ.com

Yum! Brands And The Gift That Keeps On Giving: Chinese Demand ...

 
From Our Partners