Louisville / KY. (yb) Yum! Brands Inc. reported results for the second quarter ended June 13, 2015, including EPS of 0.69 USD, excluding Special Items. Reported EPS was 0.53 USD. Highlights:
- Worldwide system sales grew three percent. Worldwide restaurant margin was even at 15.5 percent, and worldwide operating profit decreased one percent.
- Total international development was 291 new restaurants; 75 percent of this development occurred in emerging markets.
- China Division system sales declined four percent, as seven percent unit growth was offset by a ten percent same-store sales decline. Restaurant margin decreased 2.2 percentage points to 14.6 percent. Operating profit decreased 25 percent.
- KFC Division system sales increased six percent, driven by two percent unit growth and three percent same-store sales growth. Operating margin increased 1.3 percentage points to 21.9 percent. Operating profit increased ten percent.
- Pizza Hut Division system sales increased one percent, driven by two percent unit growth. Same-store sales were even. Operating margin decreased 0.9 percentage points to 22.6 percent. Operating profit decreased one percent.
- Taco Bell Division system sales increased nine percent, driven by three percent unit growth and six percent same-store sales growth. Operating margin increased 4.7 percentage points to 29.5 percent. Operating profit increased 29 percent.
- India Division system sales were even, as 16 percent unit growth was offset by an eleven percent same-store sales decline.
- Worldwide effective tax rate increased to 25.6 percent from 24.9 percent.
- Foreign currency translation negatively impacted operating profit by 22 million USD.
Chief Executive’s Commentary
Greg Creed, CEO, said «EPS exceeded our original expectations in the second quarter and I am pleased with the continued progress we are making in China, as well as the performance from our Taco Bell and KFC Divisions. I am confident we will deliver full-year EPS growth of at least ten percent, driven by a strong second half in China and solid brand-building initiatives underway at each of our divisions».
«China Division restaurant margin in the second quarter was an encouraging 14.6 percent, even though same-store sales declined ten percent, reinforcing our belief in significant profit leverage as sales recover. We expect substantial same-store sales and profit growth in the second half given overall trends in sales and brand perceptions. Furthermore, the China Division remains on track to open at least 700 new restaurants this year, laying the groundwork for future growth».
«Outside of China, Taco Bell is firing on all cylinders driven by industry-leading innovation and a solid breakfast platform. KFC continues to produce consistently positive results in both emerging and developed markets, including our U.S. business. At Pizza Hut, results continue to be soft, but we are taking clear steps to get the business back on track».
«Internationally, we are on pace to set a new record this year by opening 2’100 new restaurants, extending our lead in emerging markets. All of this should help us to achieve double-digit earnings growth this year, despite ongoing headwinds from foreign currency translation».
«Our goal remains building three iconic, global brands people trust and champion, while delivering shareholder value through our three key drivers: same-store sales growth, new-unit development and high returns on invested capital. As we continue to strengthen our business around the world, I am confident that this formula will produce consistent double-digit EPS growth over the long term» (Imgage Source: Yum! Brands / Pizza Hut).
