Yum China soars after topping expectations for earnings and sales

Yum China reported first-quarter earnings and sales that topped analysts’ forecasts, sending the shares up by as much as 10% in after-hours trading on Wednesday.

The China unit that was spun off from KFC owner Yum Brands reported adjusted earnings per share of $US0.44 and revenue of $US1.28 billion. Analysts had forecast EPS of $US0.38 on revenue of $US1.27 billion, according to Bloomberg.

Sales at stores open for at least one year — same-store sales — jumped 1%, stronger than the expectation for a decline by 0.7%.

In China, same-store sales at KFC rose 1% and 2% at Pizza Hut during the quarter.

Yum Brands, which also owns Pizza Hut, announced in October 2015 that it would spin off its China operations through a distribution of common shares to shareholders. Some analysts encouraged the move after Yum Brands saw several quarters of declining sales, and believed the spin off was ideal for investors that wanted to buy into China separately.

In the earnings statement, CEO Micky Pant said the company was confident it would be able to deliver up to 600 new restaurants this year and grow operating profit in the double-digits, excluding the impact of foreign currency.

“More importantly we feel our foundation is even stronger to capitalise on the long-term potential of China,” Pant said.

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