Avian influenza in China pressures Yum! Brands results

by Staff
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LOUISVILLE, KY. — Pressure from Avian flu and the December poultry supply incident in China contributed to a 15% decline in income at Yum! Brands, Inc. during the second quarter.

For the quarter ended June 15, the company had income of $281 million, equal to 62c per share on the common stock, which compared with income of $331 million, or 71c per share, during the same quarter of the previous year. Sales for the quarter were $2,474 million, down 10% from $2,762 million.

“Second-quarter e.p.s. declined 16%, which was generally in line with our expectations,” said David C. Novak, chairman and chief executive officer. “KFC sales and profits in China were significantly impacted by intense media surrounding Avian flu as well as the residual effect of the December poultry supply incident. The good news is that China sales are recovering as expected. The extensive media surrounding Avian flu in China has subsided and same-store sales at KFC are clearly improving.

“I’m pleased with the very strong performance at Pizza Hut casual dining, which delivered solid same-store sales growth as we continue to open new units at a record pace. For the total China Division, we remain on track to open at least 700 new units this year. This means we will have opened about 1,600 units over a two-year period. As KFC sales continue to recover, we expect to have solid momentum in China heading into 2014.”

The China Division had an operating profit of $68 million in the quarter, down 63% from $182 million during the same quarter of the previous year. Sales were $1,429 million, down 7% from $1,535 million.

The United States Division posted operating profit of $173 million, up 4% from $166 million during the same quarter of the previous year. The division had sales of $510 million, down 19% from $630 million.

For the six months ended June 15, the company as a whole had income of $618 million, down 22% from $789 million during the same period of the previous year. Sales for the six months were $4,573 million, down 10% from $5,106 million.
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