Yum! Brands: Reports Second-Quarter 2016 Results

Louisville / KY. (yb) Yum! Brands Inc. reported results for the second quarter ended ended June 11, 2016, 2016, including GAAP EPS of 0.81 USD and EPS excluding Special Items of 0.75 USD. Core operating profit growth figures exclude foreign currency translation (F/X) and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide reported results. Highlights:

• Opened 373 new restaurants worldwide; 72 percent of international development occurred in emerging markets.
• On track to finalize China separation with targeted completion date around October 31, 2016.
• Foreign currency translation negatively impacted operating profit by 16 million USD.

Full-year GAAP operating profit growth guidance is not provided due to our inability to forecast when gains and losses related to re-franchising transactions classified as Special Items will occur, as the timing of these transactions is often outside our control, and the resulting gains and losses are dependent upon future market conditions. 2016 core operating profit growth guidance assumes no separation of the China business.

Chief Executive Greg Creed said «Yum! Brands delivered second-quarter core operating profit growth of 7 percent and EPS growth, excluding Special Items, of 9 percent. Given our strong first-half results and current trends in China, I’m pleased to raise our full-year core operating profit growth forecast to at least 14 percent from 12 percent previously. I’m particularly pleased with the continued sales momentum at KFC China, which delivered better-than-expected same-store sales growth of 3 percent. This represents our fourth-consecutive quarter of positive same-store sales growth at KFC China despite the second quarter being our most difficult of the year from a historical sales overlap standpoint. 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».

«Outside of China, challenging industry conditions in the U.S. contributed to soft sales results. However, our three brand divisions in the aggregate delivered core operating profit growth largely in-line with our expectations and remain on track to deliver against their full-year core operating profit growth targets. We’re confident in our plans to drive second-half sales improvement led by a continued focus on innovation, value and our core products».

«This is a transformational year for our company as we remain on track to finalize the separation of our China business with a targeted completion date around October 31, 2016, ultimately creating two powerful, independent, focused growth companies. Our capital structure is fully in place and we plan to return a significant amount of capital to shareholders both prior to and after the spin. I look forward to sharing additional details on the transformative initiatives we are undertaking as we become a more heavily franchised company at our New York investor conference in October».