Restaurant operator Yum! Brands Inc. (YUM) said Tuesday after the markets closed that its second quarter profit fell 30% from last year, mainly due to continued weak performance of its China division.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast.
At the same time, the company reconfirmed its full year guidance of at least 10% earnings per share growth in 2015.
Greg Creed, who took over as Yum! Brands CEO on January 1, said, "EPS exceeded our original expectations in the second quarter and I'm pleased with the continued progress we are making in China, as well as the performance from our Taco Bell and KFC Divisions. Im confident we will deliver full-year EPS growth of at least 10%, driven by a strong second half in China and solid brand-building initiatives underway at each of our divisions."
Yum! Brands shares are currently losing 0.59% in after hours trading after closing the day's regular trading session at $91.99, up 88 cents. The shares trade in a 52-week range of $65.81 to $95.90.
Effective January 1, 2014, the company combined its Yum! Restaurants International and U.S. divisions into three global brand divisions: KFC, Pizza Hut and Taco Bell. China and India remains separate divisions given their strategic importance and enormous growth potential.
Total revenue for the company's all-important China division fell 4% to $1.64 billion in the second quarter, while same-store sales declined 10%, including declines of 12% at KFC and 4% at Pizza Hut Casual Dining. The division's operating profit dropped 26% from last year to $144 million.
China division's second quarter same-store sales were significantly impacted by adverse publicity in July 2014 surrounding improper food handling practices by a former supplier. The division opened 80 new units during the quarter.
The company said it expects substantial same-store sales and profit growth in its China division in the second half given overall trends in sales and brand perceptions. The Division remains on track to open at least 700 new restaurants this year.
Second quarter revenue for the company's KFC division fell 8% to $694 million, while the division's operating profit declined 2% to $152 million.
Pizza Hut division's second quarter revenue declined slightly to $264 million from $265 million last year, while the division's operating profit fell 4% to $60 million.
Second quarter revenue from the company's Taco Bell division rose 9% to $476 million, while the division's operating profit jumped 29% to $140 million.
For the second quarter ended June 13, 2015, the Louisville, Kentucky-based company reported net income of $235 million or $0.53 per share, compared to $334 million or $0.73 per share for the year-ago quarter.
Excluding special items, adjusted earnings for the latest quarter were $0.69 per share.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.63 per share for the second quarter. Analysts' estimates typically exclude special items.
Total revenue for the second quarter fell 3% to $3.11 billion from $3.20 billion in the same quarter last year. Seventeen analysts had a consensus revenue estimate of $3.19 billion for the second quarter.
This marks the fourth straight quarter of revenue decline.
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