Yum! Brands' 1Q EPS growth at 7%

by Meat&Poultry Staff
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LOUISVILLE, Ky. – Yum! Brands Inc. announced for the first quarter ended March 19, EPS of $0.63, excluding Special Items. After a Special Items loss of $0.09, reported EPS was $0.54. Yum! reconfirms full year 2011 EPS growth of at least 10 percent, excluding Special Items.

Worldwide operating profit increased 5 percent, including 18 percent in China and 8 percent in Yum! Restaurants International, partially offset by a 13 percent decline in the US. Worldwide system sales increased 5 percent, including 24 percent in China and 6 percent in YRI. System sales in the US were flat.

Strong international development continued with 223 new restaurants opened, including 92 new units in China. Same-store sales grew 13 percent in China and 2 percent in YRI, with a 1 percent decline in the US.

Worldwide restaurant margin improved 0.6 percentage points to 17.6 percent. Share repurchases totaled $142 million for 2.9 million shares at an average price of $49 per share.

“I’m pleased to report strong international performance helped Yum! Brands deliver EPS growth of 7 percent in the first quarter, prior to special items,” said David Novak, chairman and CEO. “Our China business continues to fire on all cylinders. Operating profit grew 18 percent, prior to foreign currency translation, as same-store sales jumped a remarkable 13 percent, driven by a 15 percent increase in same-store transactions.”

Yum! Restaurants International [YRI] operating profit increased 8 percent, led by outstanding performance in high-growth emerging markets, where system sales grew 10 percent, both prior to foreign currency translation, he added.

“Importantly, we continue to build scale in India, the second-largest emerging market, where system sales were up 42 percent.” Novak said. “In spite of these international results, our overall performance was dampened by an unexpected 13 percent decline in US profits. We knew commodity inflation would be a headwind, but did not plan for a significant reversal in sales trends at Taco Bell due to false claims made about our food quality that resulted in negative publicity. Given Taco Bell's category leadership, we remain bullish on its long-term growth strategy.”
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