KFC Yum Brands Taco BellWorkers set up a KFC billboard in Beijing, China.

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UPDATE:Yum Brands, the owner of KFC, Pizza Hut, and Taco Bell, reported better-than-expected quarterly results after the bell today, with net income surging 73 per cent to $458 million, or $0.76 per share.

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Revenue climbed 13 per cent during the period, hitting $2.74 billion, ahead of expectations for $2.7 billion.

China continued to generate strong results for Yum, with total sales gaining 28 per cent to $1.28 billion during the first three months of the year, representing 46.7 per cent of the company’s overall revenue.

Same-store sales in the region increased 14 per cent, while Yum opened 168 new restaurants. 

“Our China business continues to fire on all cylinders, and our category-leading brands are as strong as ever,” Yum Chairman and Chief Executive David Novak said.

Margins declined 150 basis points to 23.6 per cent in China, as wage inflation increased by 17 per cent.

Yum also reported surprising health out of its U.S. unit, with comparable sales up five per cent.


Yum Brands, the owner of KFC, Pizza Hut, and Taco Bell, will report quarterly results after U.S. markets close today, with analysts eagerly anticipating what the company will have to report on the Chinese market.

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Analysts forecast Yum will earn $0.73 a share this quarter on revenue of $2.7 billion, a 12 per cent increase from the year ago quarter. 

Last year the fast-food operator saw 44.1 per cent of sales driven by its Chinese division, topping the U.S.’s 30.0 per cent contribution. For 2012, Yum reported revenue of $12.6 billion and net income of $1.8 billion. 

“For now the China business appears to be comping well against difficult compares, which was a key question mark for 2012,” Jason West at Deutsche Bank says. “YUM expects China comps to moderate over the balance of 2012 as compares get tougher, though the timing and magnitude of this moderation is difficult to call.”

West forecasts same-store sales to increase by at least 15.0 per cent in China, before decelerating to 11.3 per cent for the full year. The company plans on opening more than 600 stores in China this year, following a year of blistering expansion in 2011.

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