Yum! Brands, Inc. Beats Earnings Estimates, Stock Jumps

Yum! Brands released its latest earnings report after closing bell tonight, posting adjusted earnings of 80 cents per share on $2.622 billion in sales. Analysts had been expecting the company to post adjusted earnings of 72 cents per share on $2.64 billion in revenue. In the same quarter a year ago, Yum reported earnings of 87 cents per share on $2.72 billion in revenue.

Yum! Brands, Inc. Beats Earnings Estimates, Stock Jumps

Key metrics in Yum Brands’ earnings report

Reported earnings were 81 cents per share. Yum reported a 4% increase in worldwide system sales and a decline in worldwide restaurant margin to 17.5%. The fast food chain operator opened 294 new restaurants through the world, with 88% of the new locations in emerging markets.

Sales in Yum’s China Division fell 6% due to a 12% decline in same store sales, which offset an 8% increase in unit growth. System sales from the company’s KFC Division increased 8% due to 2% unit growth and a 5% growth rate in same store sales.

The company’s Pizza Hut Division recorded a 2% increase in system sales due to a 2% unit growth. Same store sales were flat in the division. System sales in the Taco Bell Division increased 9% due to 3% unit growth and a 6% increase in same store sales. The India Division sales saw a 1% increase as an 11% decline in same store sales mostly offset an 18% increase in units.

Yum Brands reported a negative impact of $20 million from foreign currency exchange.

Yum Brands maintains guidance

Management said they continue to expect full year growth of at least 10% in earnings for this year. Despite the company’s weak performance in China, CEO Greg Creed said they remain confident in their presence in the country.

“Our confidence in China is bolstered by improving sales and upward momentum in customer perceptions,” Creed said in a statement. “China Division restaurant margins were a healthy 19% even though same-store sales declined 12%, reinforcing our belief in significant operating leverage as sales recover.”

Yum Brands said it is still on track to open 700 or more new restaurants in China this year.