A big jump in international sales helped
post a 14% rise in first-quarter profits, topping Wall Street's expectations.
The owner of the KFC, Taco Bell and Pizza Hut chains said Tuesday that earnings rose to $194 million, or 70 cents a share, from $170 million, or 59 cents a share, a year ago. Revenue increased 7% to $2.22 billion.
Analysts polled by Thomson Financial projected earnings of 64 cents a share on $2.16 billion in revenue.
U.S. system same-store sales, including those from franchisees, declined 3%. Same-store sales solely at company-owned stores dropped 6%. Same-store sales represent sales at restaurants open at least a year.
Meanwhile, the Louisville, Ky.-based company reported double-digit operating-earnings growth from its businesses in China and other international areas. China operating profits surged 31%. Yum Restaurants International, which operates restaurants in overseas areas other than China, recorded 25% operating profit growth.
"Our international businesses continue to generate strong consistent growth," David Novak, chairman and CEO, said in a statement. "We fully expect in 2007, for the seventh straight year, to open at least 1,000 new restaurants outside the U.S., which makes us the leading international developer in the retail category."
In the U.S., Yum! Brands has taken some blows recently. In December, Taco Bell was linked to an E. coli issue associated with lettuce supplied to the company's restaurants in four Northeastern states. Then in February, a video of rats running around a KFC-Taco Bell restaurant in New York City was widely circulated on the Internet and throughout the news media.
"The two incidents at Taco Bell resulted in adverse publicity and had the most significant impact on U.S. performance," Novak said. "We have taken immediate actions to address both incidents. We expect that the enduring strength of our brands and the plans we have in place will enable us to be back on track for improved U.S. performance during the second half of 2007."
Yum! said the continued growth from its China and YRI divisions has led the company to raise its full-year 2007 earnings outlook to at least 11% growth or $3.23 a share, which matches Wall Street's estimate. The company previously projected at least 10% growth for 2007, or earnings of $3.21 a share.
Yum! shares were climbing $1.08, or 1.7%, to $64.20 in after-hours trading.