REUTERS/Wilson Chu
Yum Brands reported second-quarter earnings that topped forecasts, and raised its expectation for full-year profits after the market close on Wednesday.
"Challenging industry conditions" outside the US softened overall sales at KFC, Taco Bell, and Pizza Hut — the restaurants it operates — the company's earnings statement said.
Comparable-store sales — at locations open for at least one year — were flat in China, just as analysts had forecast.
Yum Brands reported $0.75 in adjusted earnings per share (EPS), on revenues of $3.01 billion.
Analysts had forecast that it earned $0.74 in adjusted earnings per share on revenues of $3.09 billion, according to Bloomberg.
It boosted its guidance for core operating profit growth guidance to at least 14% from 12%.
The company's shares rose by as much as 3% in after-hours trading.
Analysts were again focusing on how the restaurants performed in China, where sales slowed recently. As much as half of its sales were earned in the country in Q2.
KFC China comparable-store sales, at locations open for at least one year, rose 3%, matching the median estimate on Bloomberg.
"I’m particularly pleased with the continued sales momentum at KFC China, which delivered better-than-expected same-store sales growth," said CEO Greg Creed in the earnings statement. "Importantly, our China Division is off to a good start in the third quarter for both KFC and Pizza Hut Casual Dining, including a return to positive same-store sales at Pizza Hut Casual Dining in recent weeks."
Bloomberg Intelligence analysts noted that the second quarter is usually the toughest of the year in China, because some sales are lost to the first quarter due to the Chinese New Year.
The company last year announced it was splitting into two public companies. Yum China would become a franchise in mainland China, with exclusive rights to KFC, Pizza Hut and Taco Bell. And, Yum Brands would expand the three franchises around the world.
The company expects the split to be completed by the end of October.
Yum Brands shares had rallied about 17% this year through the market close on Wednesday.
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