Yum! Brands Inc. reported Tuesday a dip in second-quarter profit, but raised its full-year earnings forecast on what it called a strong first half of the year.
For the quarter ended June 12, Yum earned $286 million, or 59 cents per share, compared with earnings of $303 million, or 63 cents per share, in the same quarter a year ago.
In the second quarter of last year, Yum had booked a one-time gain of $68 million from the purchase of additional ownership in its KFC business in China. Excluding that and other special items each year, Yum said its latest-quarter earnings totaled 58 cents per share, a 17-percent increase from a year ago.
Second-quarter revenue rose to $2.22 billion from $2.15 billion in the same-quarter last year, reported Yum, which is based in Louisville, Ky.
For the full year, Yum said it now expects to earn $2.43 per share, up from its previous expectations of earnings of $2.39 per share, and a 12-percent increase from earnings in 2009, prior to special items.
“Overall, we are encouraged with our strong performance in a difficult macroeconomic environment,” chairman and chief executive David Novak said.
Yum’s growth has continued to come from its overseas operations, with system sales growth increasing 15 percent in China and 4 percent after currency conversion in the company’s other international markets.
Yum does not report system sales growth in its U.S. market, but said same-store sales in its domestic division remained flat from a year ago. The result included increases of 8 percent at Pizza Hut and 1 percent at Taco Bell, offset by a decline of 7 percent at KFC.
“Our primary focus is to drive same-store-sales growth during the balance of year given the challenging consumer environment,” Novak said about Yum’s U.S. business.
U.S. operating profit rose 10 percent, Yum said, driven by lower closure and impairment expense, higher restaurant margins, which increased 1.4 points, and G&A savings.
Contact Sarah Lockyer at [email protected].
