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Yum Brands profit soars 30% largely from Chinese expansion

The restaurant chain owner earns $356 million in the fourth quarter, up from $274 million a year earlier. Same-store sales grow 19% in China but fall 1% in the U.S.

February 07, 2012|By Tiffany Hsu, Los Angeles Times
  • Yum Brands chains opened a record 656 restaurants in China last year. Above, a KFC restaurant in Wuwei.
Yum Brands chains opened a record 656 restaurants in China last year. Above,… (Cao Jun, Los Angeles Times )

Taco Bell may still be having a rough time at home, but its parent, Yum Brands Inc., is riding high — and it has China to thank.

Yum, which also owns Pizza Hut and KFC, reported a 30% jump in fourth-quarter net income largely because of explosive growth abroad. The Louisville, Ky., company said it earned $356 million in the period, compared with $274 million a year earlier.

Revenue was up 15% to $4.1 billion for the quarter.

Net income for the year that ended Dec. 31 rose 14% to $1.3 billion. Revenue for 2011 increased 11% to $12.6 billion.

In China, where Yum has made a concerted effort to expand this year, same-store sales for 2011 grew 19%. In the U.S. by contrast, same-store sales, a key measure of retail health, fell 1%. The company's chains opened a record 656 restaurants in the Asian country over the year.

This month, Yum picked up a majority stake in Little Sheep Group, a 450-unit hot-pot concept based in China.

"The Yum growth story is clearly about China and a whole lot more," Yum said in a statement.

But the company had yet another slow quarter in the U.S.

Both Mexican-style fast-food chain Taco Bell and chicken chain KFC saw same-store sales slump 2%, while Pizza Hut's remained flat.

Taco Bell, whose sales fell steadily throughout the year, has struggled to recover from a lawsuit early last year over the quality of its seasoned beef filling. The suit was quickly dropped but not before it damaged Taco Bell's image.

In December, Yum sold off its Long John Silver's and A&W All-American Restaurants brands. The company is aiming to eventually own only about 5% of its Pizza Hut and KFC restaurants and 16% of Taco Bell locations.

Yum's shares rose $1.58, or 2.5%, to $64.77 after the close of regular trading following the earnings report.

tiffany.hsu@latimes.com

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