Yum! Brands 3Q growth driven by global success
October 6, 2010
by Bryan Salvage
LOUISVILLE, Ky. – Yum! Brands Inc. announced for the third quarter ended Sept. 4, worldwide operating profit grew 14% prior to foreign currency translation, including 23% in China, 16% in Yum Restaurants International (YRI) and a decline of 2% in the US. Worldwide system sales growth was 5% prior to foreign currency translation including 18% in China, 5% in YRI and 1% in the US.
The company announced same-store-sales growth in each division, including 6% in China, 1% in YRI and 1% in the US. Worldwide restaurant margin improved 1.6 percentage points including increases in China, YRI and the US.
Yum also announced a 19% increase in the company’s quarterly dividend. The quarterly cash dividend will increase from $0.21 to $0.25 per share. The company raised its full-year 2010 EPS forecast from $2.43 to $2.48 per share, or from 12% to 14% growth prior to special items, based on strong year-to-date operating profit performance.
“I’m pleased to report we are raising our full year EPS growth forecast to 14%, which will make 2010 the 9th consecutive year we meet or exceed our annual target of at least 10%,” said David Novak, chairman and CEO. “We take satisfaction that our year-to-date operating profit has increased 15%, excluding special items and the impact of foreign currency translation, and is driving our strong EPS growth this year. A key driver of our overall growth continues to be new unit development in China and Yum! Restaurants International. 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.
“We continue to make progress at all three divisions and are especially pleased with the continued strong results from our China business,” he added. “The combination of high return new unit development, same-store-sales growth and increasing margins drove operating profit growth of 23% in China for the quarter, excluding the impact of foreign currency translation.
“Overall, we are encouraged with our strong performance,” he continued. “We continue to drive aggressive, international expansion while maintaining our industry-leading return on invested capital. Our intent is to continue to build shareholder value and return cash to shareholders through dividends and share repurchases.”