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Yum! Brands Reports First-Quarter EPS Growth Of 24%, Excluding Special Items; China Division System Sales Increased 17% With Operating Profit Growth Of 80%; Yum! Reaffirms Full-Year Guidance Of At Least 20% EPS Growth

Yum! Brands, Inc. (NYSE: YUM) today reported results for the first quarter ended March 22, 2014, including EPS of $0.87.

Beginning this quarter, our financial reporting will reflect our new structure with comparable prior periods adjusted accordingly. Effective the beginning of 2014, we combined our Yum! Restaurants International and U.S. divisions into three global brand divisions: KFC, Pizza Hut and Taco Bell. China and India remain separate divisions given their strategic importance and enormous growth potential. This new structure is designed to drive greater global brand focus, enabling more effective know-how sharing and accelerated growth.

  • Worldwide system sales grew 4%. Worldwide restaurant margin increased 3.3 percentage points to 19.2% and worldwide operating profit increased 22%.
  • Total international development was 249 new restaurants; 86% of this development occurred in emerging markets.
  • China Division system sales increased 17%, driven by 7% unit growth and 9% same-store sales growth. Restaurant margin increased 6.8 percentage points to 23.4%. Operating profit increased 80%.
  • KFC Division system sales increased 4%, driven by 2% unit growth and 1% same-store sales growth. Restaurant margin decreased 0.3 percentage points to 12.9%. Operating profit increased 4%.
  • Pizza Hut Division system sales were even, as 2% unit growth was offset by a 2% same-store sales decline. Restaurant margin decreased 4.2 percentage points to 10.8%. Operating profit decreased 14%.
  • Taco Bell Division system sales were even, as 1% unit growth was offset by a 1% same-store sales decline. Restaurant margin decreased 2.6 percentage points to 15.6%. Operating profit decreased 16%.
  • India Division system sales increased 21%, driven by 25% unit growth which was partially offset by a 1% same-store sales decline. Operating profit declined $1 million.
  • Worldwide effective tax rate, prior to Special Items, decreased to 25.8% from 26.0%.
  • Foreign currency translation negatively impacted operating profit by $3 million.

First Quarter



% Change
EPS Excluding Special Items $0.87 $0.70 24%

Special Items Gain/(Loss) 1
$0.00 $0.02 NM
EPS   $0.87   $0.72   21%

1 See Reconciliation of Non-GAAP Measurements to GAAP Results for further detail of the Special Items.

Special Items are primarily related to U.S. refranchising gains.

Note: All comparisons are versus the same period a year ago and exclude Special Items unless noted. System sales and operating profit figures on this page exclude foreign currency translation.


David C. Novak, Chairman and CEO said, “Yum! Brands is clearly on its way to a strong bounce-back year delivering first-quarter EPS growth of 24%. Operating profit grew 80% in China, prior to foreign currency translation, driven by strong sales and margin growth. Looking ahead, we have significant building blocks in place in China and each of our divisions to drive sales and profit growth this year and beyond.

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