Yum! Brands, Inc. Jumps On Earnings Beat, Raised Guide

Yum! Brands, Inc. Jumps On Earnings Beat, Raised Guide
By Yum! Brands, Inc. [Public domain], <a href="https://commons.wikimedia.org/wiki/File%3AYum!_Brands_Logo.svg">via Wikimedia Commons</a>

Yum! Brands, Inc. (NYSE:YUM) released its second quarter earnings report after closing bell tonight, posting earnings of 75 cents per share, excluding special items, on $3.01 billion in revenue. Analysts had been expecting earnings of 74 cents per share on $3.07 billion in revenue. Revenue in the year-ago quarter amounted to $3.11 billion, while earnings excluding items in last year’s second quarter amounted to 69 cents per share.

Yum! Brands profits soar

Yum! Brands, Inc. (NYSE:YUM)’s GAAP earnings skyrocketed from 53 cents per share in last year’s second quarter to 81 cents per share this year. System sales worldwide grew 3% year over year, while same store sales were flat with last year. Global GAAP operating profits surged 32%.

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System sales in China increased 3%, which was what Wall Street was expecting. The fast food chain operator also said it is on track to finalize the China separation on or around October 31. System sales for the KFC division grew 6% with a 2% increase in same store sales. Yum! Brands said system sales for Pizza Hut grew 1%, with same store sales coming out flat, and Taco Bell system sales increased 2% with a 1% decline in same store sales.

CEO Greg Creed expressed satisfaction with the continuing sales momentum at the KFC China division where same store sales grew 3% for the fourth consecutive quarter of positive growth there even though the second quarter is typically the most difficult of the year.

“Outside of China, challenging industry conditions in the U.S. contributed to soft sales results,” added Creed in a statement. “However, our three brand divisions in the aggregate delivered core operating profit growth largely in-line with our expectations and remain on track to deliver against their full-year core operating profit growth targets.”

Yum! Brands raises operating profit outlook

The fast food chain opened 373 new restaurants worldwide during the second quarter, with 72% of international stores coming in emerging markets. Yum said currency headwinds had a negative impact of $16 million on operating profits.

Yum! Brands, Inc. (NYSE:YUM) management increased their guidance for full-year core operating profit growth to at least 14% from their previous outlook for at least 12%. Shares of Yum! Brands surged by as much as 3.7% to $88.91 in after-hours trades.

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