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Chinese Recovery for Yum Brands

04 December 2013

GLOBAL - Yum! Brands has seen a recovery in its sales in China - one reason why the company's CEO is forecasting a "strong bounce-back" in 2014.

Yum! Brands Inc., in advance of its Annual Investor Meeting, has reconfirmed its full-year 2013 Earnings Per Share (EPS) forecast of high-single to low double-digit decline versus prior year, excluding Special Items. Yum! expects to deliver at least 20 per cent EPS growth in 2014, excluding Special Items.

David C. Novak, Chairman and CEO, said: “We expect to have a strong bounceback in 2014 following a year that is clearly below our high expectations. In China, we have an aggressive plan to reignite sales at KFC and we expect continued strong performance at Pizza Hut Casual Dining.

"In addition, our international new-unit development pipeline remains extremely robust. We expect to open at least 1,850 new restaurants outside the US, further strengthening our leadership position in emerging markets. We also expect continued development momentum in the US and are excited about our upcoming national breakfast launch at Taco Bell.

"Importantly, with our recent announcement to combine our Yum! Restaurants International (YRI) and US individual divisions for KFC, Pizza Hut and Taco Bell, effective January 1, 2014, we are well positioned to more aggressively accelerate growth in the years ahead. We remain focused on the three keys to driving shareholder value: new-unit development, same-store sales growth and generating high returns on invested capital.”

2014 Overall Guidance

  • Yum! expects to deliver at least 20 per cent EPS growth in 2014, excluding Special Items.
  • China Division operating profit growth of at least 40 per cent
  • At least 1,850 new international units, including:
    • 700 new units in China
    • 150 new units in India
    • At least 600 new units at KFC
    • At least 400 new units at Pizza Hut
  • Global capital expenditures of $1.2 billion
  • Worldwide G&A increase of about 4 per cent
  • Estimated tax rate for years 2014 to 2016 between 26 per cent and 28 per cent
  • Foreign currency translation expected to have a slightly negative impact on earnings
  • Interest expense expected to be about $140MM
  • One per cent reduction in average diluted shares outstanding as a result of share repurchases.

China Division November Sales

November same-store sales increased an estimated one per cent for the China Division. This estimate included even sales at KFC and seven per cent growth at Pizza Hut Casual Dining.

It is important to note a limited-time “Half Priced” bucket promotion yielded an approximate 16 per cent increase in KFC same-store sales for the first 10 days of the month. This promotion ended on 10 November. KFC same-store sales were down approximately 8 per cent for the remainder of November. This particular promotion will not be repeated in December.

ThePoultrySite News Desk

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