Yum forecasts strong expansion overseas

“Yum Brands’ stock is trading higher as the owner of Taco Bell, KFC and Pizza Hut is forecasting more rapid restaurant growth outside the U.S. along with a turnaround for Taco Bell in the U.S, reported USA Today.  Healthy profit growth is expected in China, thanks to new restaurants and revenue growth at established stores, Rick Carucci, chief financial officer of Yum Brands (YUM), said Tuesday. The company on Monday reported a 30% increase in fourth-quarter profit”.

“Taco Bell accounts for more than half of Yum’s U.S. profit. But the chain was hurt by a now-dropped lawsuit that questioned the beef content in its tacos. Yum Chairman and CEO David C. Novak says Taco Bell’s sales turned positive late in the quarter. Yum shares are up $1.95, or 3%, at $65.15 in morning trading Tuesday. Yum’s global restaurant growth sped up in 2011 with the addition of 656 restaurants in China and 905 in the rest of its international markets. The company plans to keep up the pace in 2012, when it plans to open 1,500 new restaurants overseas, including about 600 in China.”

 

Yum expects its earnings-per-share to grow at least 10% in 2012. Pizza Hut led the way with a 6% increase in revenue from established U.S. stores. The chain benefited from its $10 for any pizza deal and a promotion combining pizza, appetizers and bread sticks.

“In China, fourth-quarter revenue at restaurants open at least a year rose 21%. The figure rose 3% in the division spanning the rest of Yum’s international business. Revenue reached $5.6 billion in China for the full year, up 35% from 2010. “We are bullish on China going forward for many years to come,” Blum said. ‘We don’t see that slowing down.”‘

The company is putting more emphasis on other emerging markets in places such as India, Russia and Africa. “To put this in perspective, today we have fewer than two restaurants per million people in the top 10 emerging markets, compared to nearly 60 restaurants per million people in the U.S.,” said Yum Chairman and CEO David C. Novak. ‘Clearly, we have a very long runway for growth.”‘

Yum, based in Louisville, Ky., earned $356 million, or 75 cents per share, for the quarter. That’s compared with $274 million, or 56 cents per share, a year earlier.