Yum! Brands: Announces Q3/2011 EPS Growth of 13%

Louisville / KY. (yb) Yum! Brands Inc. reported results for the third quarter ended September 03, 2011 including EPS of 0,83 USD, excluding Special Items. After a Special Items loss of 0,03 USD, reported EPS was 0,80 USD. As a result of strong performance in China and other emerging markets, Yum! reconfirms full year EPS growth forecast of at least twelve percent, excluding special items. Highlights:

• Operating profit grew seven percent in China and three percent at Yum! Restaurants International (YRI), prior to foreign currency translation. Operating profit declined 16 percent in the U.S.
• Foreign currency translation positively impacted operating profit by 32 million USD.
• Worldwide system sales grew six percent, prior to foreign currency translation, including 29 percent in China and eight percent at YRI. System sales in the U.S. declined three percent.
• Strong international development continued with 331 new restaurants opened, including 138 new units in China. Yum! is now expecting to open a record 600 new units in China this year. Additionally, the company expects to open 900 new units in YRI.
• Same-store sales grew 19 percent in China and three percent at YRI, and declined three percent in the U.S.
• Worldwide restaurant margin declined 1,9 percentage points to 17,2 percent.
• During the quarter, the Company announced a 14 percent increase in its quarterly dividend.

Chairman´s comment:

David C. Novak, Chairman and CEO: «I am pleased to report EPS growth of 13 percent in the third quarter, excluding special items. As a result of strong performance in China and other emerging markets, we confidently reaffirm our full-year EPS growth forecast of at least twelve percent, which will make 2011 the tenth consecutive year we exceed our annual target of at least ten percent EPS growth».

«In China, operating profit grew seven percent for the quarter as system sales jumped 29 percent, prior to foreign currency translation. Likewise, year-to-date operating profit increased 15 percent with system sales up 27 percent. This tremendous sales growth, combined with our expectation to open a record 600 new restaurants this year, gives us even more confidence our China business model is as strong as ever. At Yum! Restaurants International (YRI), operating profit increased three percent in the quarter and seven percent year-to-date, prior to foreign currency translation. We are extremely excited about our progress in emerging markets like India, Africa and Russia, as these businesses will contribute meaningful profit growth to Yum! in the coming years. Importantly, we expect to open about 900 new restaurants this year at YRI. The robust new unit growth in China and YRI not only contributes to this year´s earnings, but positions Yum! for strong growth in 2012 as well».

«Our impressive international growth was offset by a 16 percent decline in U.S. profits. We are obviously disappointed in our U.S. performance. However, we have aggressively developed a pipeline of category leading innovation and have productivity initiatives planned to dramatically improve sales and profit performance in 2012. Looking ahead, the strength of our international brands and outstanding new unit development, combined with aggressive U.S. initiatives, make us confident we will continue our track record of double-digit earnings growth next year and beyond».