Yum Profits Surge as China Sales Recover

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Yum Profits Surge as China Sales Recover

Yum! Brands Inc announced on Tuesday that profits for the first-quarter jumped 18% as sales recovered in China. Stores open for at least 12 months added 9% in the Asia market after declining for five straight quarters.

The results indicate the company is recovering from the effects of an avian flu outbreak and a probe into its supply chain. The firm has launched a KFC quality assurance campaign to reassure its customers of the safety of its food.

About half of its earnings come from the Chinese market. The company is developing new items on its food menu and working out marketing strategies to enhance customer traffic to its Chinese restaurants.

Chief Executive Officer David Novak said yesterday that KFC’s newly introduced Chinese menu that has 15 new foods is going down well with diners and helping bolster sales. He said that has boosted Yum’s confidence to expand in the Asian nation with the addition of 700 new restaurants there, according to Bloomberg.

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Yum shares added 1.2% to $78.40 as of 9:39 am in New York. The stocks surged 2.5% in 2014 through yesterday. That compares with a 1.7% decline posted by a restaurant gauge in the Standard & Poor’s 500.

The company’s net income soared to $399 million or 87 cents per share, up from $337 million or 72 cents, the previous year. Analysts predicted a per share income of 84 cents.

Revenue climbed 7.5% to $2.72 billion in the quarter. That compares with an analyst forecast of $2.79 billion on average.

The company confirmed its full-year estimates for a per-share profit increase of 20%.

As ABC reports, the burger chain said that its sales in the US plunged 1.7%, partly due to bad weather.

All the three of US chains operated by Yum saw declines. KFC’s sales at established locations plunged 3%. Pizza Hut declined 5% as Taco Bell lost 1%.

To contact the writer of this article: Yashu Gola at yashu@forexminute.com

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