Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Yum! Brands, Inc.    YUM

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Yum! Brands, Inc. : Yum stumbles badly in China, warns on profit

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/05/2013 | 02:11am CET

KFC parent Yum Brands Inc warned on Monday that it expects 2013 earnings to shrink rather than grow as it struggles to manage a food safety scare in China, and sees no return to growth in restaurant sales there until the fourth quarter.

Yum shares fell 5.6 percent in after-hours trading, as Wall Street analysts and investors digested the disappointing news from the company that is widely seen as a model for how to do business in the complex Chinese market.

"This is going to take all the experts they have in public relations to stem the tide. I don't think anyone saw this coming," Edward Jones analyst Jack Russo said.

Yum reported a 6 percent drop in fourth-quarter sales at established restaurants in China due to "adverse publicity" regarding chemical residue found in some of its chicken supply.

Its China business continued to suffer in January, when same-store sales dropped 37 percent, including a 41 percent fall for KFC and a 15 percent decline for Pizza Hut Casual Dining.

Yum expects China's same-store sales to be down 25 percent for the first quarter, which includes only the months of January and February. It said KFC same-store sales in China should turn up by the fourth quarter.

As a result, Yum forecast a "mid-single digit" percentage decline in earnings per share for 2013. Yum previously forecast 2013 earnings per share growth of at least 10 percent, and analysts polled by Thomson Reuters I/B/E/S on average had expected the same.

Yum has nearly 5,300 restaurants in China, mostly KFC, and the region accounts for more half its sales and 40 percent of total operating profit. Its strong reputation for high food quality helped it grow briskly in a country that has been rocked by serious and persistent food safety scandals.

Yum's China sales first took a hit in mid-December when government food safety agencies began probing the company's supply chain. The investigations were prompted by a report on China Central Television, which found that two of Yum's suppliers purchased chicken from farmers who used excessive levels of antibiotics in their animals.

Yum stopped sourcing from one of those suppliers and cut purchases from a problematic plant used by the other.

While the company was not fined by food safety authorities, it has suffered a huge backlash in the mainstream media and on Weibo, China's equivalent to the popular U.S. social media site Twitter.

In early January, Yum apologized to customers in China over its handling of the food scare.

On Monday, it said it would begin an aggressive marketing campaign after the Chinese New Year on February 10 to restore KFC's brand image.

The company would do well to shake off all corporate "hubris" and fall on its sword, said branding expert Robert Passikoff, president of Brand Keys.

"If your same store sales are down by more than one-third, something's not working," Passikoff said.

Fourth-quarter net income at Yum fell to $337 million, or 72 cents per share, from $356 million, or 75 cents per share, a year earlier.

Excluding special items, Yum had a profit of 83 cents per share. That topped analysts' average estimate by a penny, according to Thomson Reuters I/B/E/S.

Total revenue rose to $4.15 billion from $4.11 billion.

Through Monday's close at $63.94, Yum shares were down 14 percent from late November, when they hit an all-time high, but then sank on the initial China sales warning.

Following Monday's warning, after the regular market close, shares of Yum slid 5.6 percent in late trade to $60.33.

(Reporting By Lisa Baertlein in Los Angeles; Additional reporting by Kazunori Takada in Shanghai; Editing by Leslie Gevirtz and Tim Dobbyn)

By Lisa Baertlein

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on YUM! BRANDS, INC.
01:01p PIZZA HUT : ® Offers An Award-Worthy Mealtime Deal With 50 Percent Off Online Pi..
08:22a YUM! BRANDS, INC. (NYSE : YUM) Files An 8-K Departure of Directors or Certain Of..
08:15a Food chain wants to grow fast
02:37a Food chain wants to grow fast
02/17 YUM BRANDS INC : Change in Directors or Principal Officers (form 8-K)
02/17 YUM BRANDS : Recognized on FORTUNE’s World’s Most Admired Companies ..
02/16 YUM! BRANDS : Announces Changes to Board of Directors
02/14 YUM BRANDS : Taco Bell Says “I Do” to Weddings
02/10DJYUM CHINA : Brands Sales Rise Following China Spinoff -- WSJ
02/10 YUM BRANDS : L.L. Bean to offer early retirement Business briefing
More news
Sector news : Quick Service Restaurants
12:35p MCDONALD : Hong Kong union joins critics of McDonald's HK, China sale, sees pay ..
02/17 Spotify-backed Soundtrack Your Brand raises $22 million for expansion
02/14DJIn Trump Age, Taking a Different Tack on Workplace Diversity
02/10DJYUM CHINA : Brands Sales Rise Following China Spinoff -- WSJ
02/09 YUM BRANDS : profit tops expectations as KFC, Taco Bell deliver
More sector news : Quick Service Restaurants
News from SeekingAlpha
02/16 Yum Brands Crushes Q4, But Is It Enough?
02/13 WEEKLY RESTAURANT REPORT : Earnings Blitz, Panera 2.0 Steals The Show
02/12 Tracking Dan Loeb's Third Point Portfolio - Q4 2016 Update
02/10 Loeb buys banks; pharma, Alibaba among sales
02/10 WALL STREET BREAKFAST : Reckitt Benckiser Takes Some Baby Steps
Advertisement
Financials ($)
Sales 2017 5 646 M
EBIT 2017 1 760 M
Net income 2017 1 034 M
Debt 2017 8 930 M
Yield 2017 2,19%
P/E ratio 2017 25,12
P/E ratio 2018 21,64
EV / Sales 2017 6,03x
EV / Sales 2018 7,52x
Capitalization 25 103 M
More Financials
Chart YUM! BRANDS, INC.
Duration : Period :
Yum! Brands, Inc. Technical Analysis Chart | YUM | US9884981013 | 4-Traders
Full-screen chart
Technical analysis trends YUM! BRANDS, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 23
Average target price 69,4 $
Spread / Average Target 1,4%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Greg Creed Chief Executive Officer & Director
David W. Gibbs President & Chief Financial Officer
Robert D. Walter Non-Executive Chairman
Thomas M. Ryan Lead Independent Director
David Wyatt Dorman Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
YUM! BRANDS, INC.8.01%25 103
MCDONALD'S CORPORATION5.00%106 131
CHIPOTLE MEXICAN GRILL..13.33%12 304
YUM CHINA HOLDINGS INC1.72%10 185
DOMINO'S PIZZA, INC.18.02%9 057
DOMINO'S PIZZA ENTERPR..-13.68%3 819
More Results