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Yum's 4Q net income jumps 27%

CEO calls 2010 ‘perhaps our best year as a public company’

Yum! Brands Inc. reported Wednesday a 27-percent year-over-year increase in fourth-quarter net income, driven by a 6-percent increase in total revenue and reduced special charges for impairment and closures taken in late 2009.

The final quarter of 2010 included profit of $274 million, or 56 cents per share, on revenue of $3.56 billion.

While growth in China continued to fuel Yum’s performance, fourth-quarter profit also was helped by a decrease in closure and impairment charges from year to year, as well as a favorable tax rate.

For the full year, net income rose 8 percent to $1.16 billion, or $2.38 per share, from 2009 results of $1.07 billion, or $2.22 per share. Revenue in 2010 increased 5 percent to $11.34 billion.

Calling 2010 “perhaps our best year as a public company,” David C. Novak, chairman and chief executive at Louisville, Ky.-based Yum, cited performance in China, global unit growth and operating profit gains across all business divisions. International development included the opening of 1,391 new restaurants, including 507 new units in China and 884 new units in other international markets. Yum also continued to refranchise restaurants in the United States.

“As we enter 2011, we know that we face commodity inflation and a global economy that is still recovering,” Novak said in a statement. “However, we are fortunate that the sizable unit development we achieved in 2010 provides us with a head start toward achieving our 2011 profit growth. I am very confident that we will build on our track record of double-digit EPS growth.”

Segment highlights:

China: System sales rose 17 percent for the full year and 19 percent for the fourth quarter, prior to the benefit of foreign currency translation. Same-store sales increased 6 percent. The division’s operating profit surged 27 percent in 2010 to $755 million.

International: Yum’s international division, which includes restaurants in Asia — excluding China — as well as Europe, the Middle East, Latin American, Australia, Russia and India, saw system sales increase 4 percent for the year and 6 percent for the fourth quarter. Full-year operating profit rose 19 percent to $589 million.

United States: Same-store sales increased 1 percent for the full year, driven by growth of 8 percent at Pizza Hut and 2 percent at Taco Bell, and offset by a decline of 4 percent at KFC. Fourth-quarter same-store sales increased 5 percent, reflecting growth of 10 percent at Pizza Hut, 4 percent at Taco Bell, and 1 percent at KFC. In the year-earlier periods, same-store sales fell 5 percent for the year and 8 percent for the fourth quarter. The U.S. segment’s operating profit increased 3 percent in 2010 to $668 million.

Yum operates or franchises more than 37,000 restaurants worldwide.

Contact Sarah Lockyer at [email protected].

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