Skip navigation

Yum posts jump in 3Q profit

Company raises outlook for 2010 on overseas growth plans

Yum! Brands Inc. raised its outlook for 2010 after reporting that international growth helped drive increases in sales and profit for the third quarter.

For the Sept. 4-ended third quarter, Louisville, Ky.-based Yum had net income of $357 million, or 74 cents per share, compared with year-ago profit of $334 million, or 70 cents per share.

Total revenue rose 3 percent to $2.86 billion in the third quarter, compared with $2.78 billion a year earlier. Worldwide system sales growth, before foreign currency translation, was 5 percent, comprising gains of 18 percent in Yum’s China division, 5 percent in Yum Restaurants International, or YRI, and 1 percent in the United States.

New-unit growth in international markets, especially China, powered Yum to a 14-percent jump in operating profit, before foreign currency conversion. That increase included gains of 23 percent in China and 16 percent in YRI, offsetting a 2-percent decline in Yum’s domestic division.

“A key driver of our overall growth continues to be new-unit development in China and Yum Restaurants International,” David Novak, Yum's chairman and chief executive, said in a statement. “We expect to open about 1,400 international new units this year. This new-unit growth positions us well for another successful year in 2011.”

Same-store sales rose at all three of Yum's divisions, with increases of 6 percent in China, 1 percent in YRI and 1 percent in the United States.

For the second straight quarter, large same-store sales gains at Pizza Hut and more modest growth at Taco Bell offset heavy sales losses at KFC in the United States. Same-store sales grew 8 percent at Pizza Hut and 3 percent at Taco Bell, but fell 8 percent at KFC.

“Our U.S. business modestly improved same-store sales growth and margin, but operating profit declined slightly,” Novak said. “We expect sales momentum to continue in the fourth quarter.”

Yum raised its earnings guidance for the full year to $2.48 per share, which would represent a 14-percent gain from a year earlier and a more aggressive target than the original estimate of $2.43 per share, a 12-perent jump.

Yum said it is continuing refranchising efforts for its domestic system, having sold 98 corporate restaurants to franchisees year-to-date. Similar refranchising is underway in the international division as well, including a transaction expected to close by the end of the month for the sale of 224 KFCs and 123 Pizza Huts in Mexico to an existing Latin American franchisee.

Yum, which also operates and franchises A&W and Long John Silver’s, has more than 37,000 restaurants in more than 110 countries.

Contact Mark Brandau at [email protected].

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.