Yum! Brands: Announces Full-Year EPS Growth of 14 Percent

Louisville / KY. (yb) Yum! Brands Inc. reported results for the fourth quarter ended December 31, 2011 including EPS of 0,75 USD. Reported EPS for the full year was 2,74 USD. Full year and fourth quarter results for Yum! Restaurants International (YRI) and the U.S. reflect the benefit of an additional week. This 53rd week did not impact China Division results.

Full Year Highlights

  • Worldwide system sales grew seven percent, prior to foreign currency translation, including 29 percent in China and eight percent at YRI. System sales in the U.S. were even.
  • Same-store sales grew 19 percent in China, three percent at YRI and declined one percent in the U.S.
  • Record international development with 1’561 new restaurants, including 656 in China and 905 at YRI.
  • Worldwide operating profit grew eight percent, including a positive impact from foreign currency translation of 77 million USD. Prior to foreign currency translation, operating profit grew four percent, including 15 percent in China and nine percent at YRI, offsetting a twelve percent decline in the U.S.
  • Worldwide restaurant margin declined 0,9 points to 16,0 percent.
  • Increased annual dividend rate to 1,14 USD per share. This marked the seventh consecutive year we increased our dividend at a double-digit rate since initiating a dividend in 2004.
  • Repurchased 14,3 million shares totalling 733 million USD at an average price of 51,00 USD.
  • Remained an industry leader with return on invested capital of over 22 percent.

Fourth Quarter Highlights

  • Worldwide system sales grew eleven percent, prior to foreign currency translation, including 33 percent in China, ten percent at YRI and six percent in the U.S.
  • Same-store sales grew 21 percent in China, 3 percent at YRI and 1 percent in the U.S.
  • Operating profit grew 15 percent in China and twelve percent at YRI, prior to foreign currency translation. Operating profit grew ten percent in the U.S.
  • Worldwide restaurant margin declined 1,1 percentage points to 14,3 percent.
. Q4/2011 Q4/2010 % Change FY-2011 FY-2010 % Change
EPS Excluding Special Items 0,75 USD 0,63 USD 20 % 2,87 USD 2,53 USD 14 %
Special Items Gain/(Loss) (0,00 USD) (0,0 USD) NM (0,13 USD) (0,15 USD) NM
EPS 0,75 USD 0,56 USD 33 % 2,74 USD 2,38 USD 15 %

David C. Novak, Chairman and CEO: «I am pleased to report full-year EPS growth of 14 percent, making 2011 the tenth consecutive year we exceeded our annual target of at least ten percent. The highlight of 2011 was again the exceptional performance of our China business, which grew system sales by 29 percent and operating profit by 15 percent, prior to foreign currency translation. We opened a record 656 new restaurants and delivered extraordinary same-store sales growth of 19 percent. Clearly, our KFC and Pizza Hut brands in China continued to strengthen their category-leading positions».

«At the same time, Yum! Restaurants International opened 905 new units, including 622 in high-growth emerging markets. We are on the ground floor of growth in India, Russia and Africa, where system sales grew at strong double-digit rates. For the year, our emerging market businesses at Yum! Restaurants International grew system sales 13 percent, prior to foreign currency translation, including new-unit growth of seven percent. Emerging markets contributed nearly 50 percent of operating profit at Yum! Restaurants International. The Yum! growth story is clearly about China and a whole lot more».

«We continue to focus on three key elements that drive the value of our company: new-unit development, same-store sales growth, and high returns. Our new-unit potential in emerging markets is arguably the best in the restaurant industry. To put this in perspective, today we have fewer than two restaurants per million people in the top ten emerging markets compared to nearly 60 restaurants per million people in the U.S. Clearly, we have a very long runway for growth».

To fully maximize the value of our existing asset base of 37’000 restaurants, we are introducing sales layers like breakfast, expanded beverages and new product platforms. Finally, we continue to be disciplined with capital as we invest in high-return growth opportunities around the world, along with paying a meaningful dividend and making significant share repurchases. Our return on invested capital of over 22 percent is among industry leaders and has improved for eight consecutive years. We are proud of our consistent track record of growth and are well-positioned to meet or exceed our annual target of at least 10 percent EPS growth in 2012».