Yum! Brands released its third quarter earnings report after closing bell tonight, posting adjusted earnings of $1.09 per share on $3.32 billion in revenue. Analysts had been expecting earnings of $1.10 per share on $3.49 billion in revenue. In last year’s third quarter, the fast food chain operator reported $1 per share in earnings and $3.43 billion in sales.
Yum! Brands’ profits grow
Yum! Brands’ core operating profits increased 11%, while adjusted earnings grew 9% year over year. GAAP earnings surged to $1.56 per share from 95 cents per share. Currency exchange was a $34 million headwind on operating profits.
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Same store sales for the KFC Division grew 4% year over year, including a 6% increase in U.S. same store sales. System sales for the segment grew 7%. Same store sales for the Taco Bell division grew 3%, while system sales increased 5%. Core operating profits for the China Division grew 14%, while core profits for KFC increased 19%. Pizza Hut profits declined 5%, while Taco Bell operating profits increased 9%.
Yum! Brands increases guidance
Yum! CEO Greg Creed said they have increased their guidance for core operating profit growth for the full year from at least 14% to at least 15%. He expressed satisfaction about the momentum they observed in the company’s segments during the third quarter.
“In the third quarter, I was pleased with both KFC’s and Taco Bell’s performance, each of which returned to a focus on core menu items, but in ways that were distinctive, disruptive and relevant,” Creed said in a statement. “Both brands had accelerating same-store sales growth, despite sluggish QSR industry trends, especially in the U.S. “
He added that the China Division performed well in the first six weeks of the third quarter, but the second half of the quarter was a problem as tougher laps arrived and an international court ruling pertaining to the South China Sea further impacted the segment and also other Western brands in addition to Yum.
Yum! Brands also said it’s on track to finalize the separation of the China operations. Yum China Holdings is expected to start trading on the New York Stock Exchange with the ticker YUMC on November 1.
Shares of Yum! Brands tumbled in after-hours trades, falling by nearly 4% at one point before bouncing. As of this writing, the stock is down 2.28% at $86.60.