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Yum outlines outlook for 2011

Company also reaffirms 2010 earnings guidance

Yum! Brands Inc. reaffirmed its 2010 earnings guidance Friday and predicted that it would continue its streak of earnings growth next year with a targeted increase of 10 percent for 2011.

The Louisville, Ky.-based operator and franchisor of KFC, Taco Bell and Pizza Hut said it would its meet its 14-percent growth goal for earnings per share this year, which would equal $2.48 excluding one-time items, as stated in the company’s third-quarter earnings report in October.

The company also projected per-share earnings growth of at least 10 percent in 2011, which it said would mark the 10th consecutive year of meeting or exceeding that benchmark.

“2010 has been a strong year, led by our China business, and I’m pleased to report we remain on track to deliver 14-percent EPS growth,” said Yum chairman and chief executive David Novak. “We take satisfaction that our EPS growth this year has been driven by strong operating profit growth, including expected gains in all of our business segments. Continued robust new-unit development in China and Yum! Restaurants International not only contributed to this year’s strong results but [also] sets the company up for growth in 2011.”

Yum offered details on its 2011 outlook in three major divisions of the United States, China and Yum Restaurants International:

• In the United States, Yum projected operating profit growth of 6 percent at Taco Bell, aided by an expected 3-percent gain in same-store sales. For the rest of its U.S. business, comprising KFC and Pizza Hut as well as Long John Silver’s and A&W, the company expects to grow operating profit by 3 percent. Yum said it plans to refranchise 500 restaurants in the United States in 2011, netting about $150 million in proceeds.

• China once again will be the fastest growing division for Yum, as the company projects 15-percent operating-profit growth, aided by around 475 new units in 2011. Yum expects its China division to grow system sales by 12 percent and to increase same-store sales by at least 4 percent.

• Yum Restaurants International, or YRI, is expected to grow operating profit at least 10 percent, with approximately 900 new restaurants in 2011, which would be an increase in the system size of between 3 percent and 4 percent. Yum is projecting system sales growth of 6 percent for the international division, with a same-store sales increase of between 2 percent and 3 percent.

Yum has more than 37,000 restaurants worldwide.

Contact Mark Brandau at [email protected].

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