Taco Bell, KFC growth help Yum Brands beat 1Q profit estimate; China still in sales slump

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LOUISVILLE, Kentucky — Yum Brands Inc.'s first-quarter profit fell but still topped Wall Street expectations as global sales jumped at its Taco Bell and KFC brands.

Sales declined sharply in China, where Yum has been struggling since a food-supply scare last summer. Still, the drop wasn't as steep as at the end of last year.

Shares rose 4.5 percent in after-hours trading Tuesday.

The parent company of KFC, Taco Bell and Pizza Hut reported a profit of $362 million, or 81 cents per share, for the quarter that ended on March 21, down 9 percent from $399 million, or 87 cents per share, the year before.

It earned 80 cents per share on an adjusted basis, which topped the 72 cents per share anticipated by analysts surveyed by Zacks Investment Research.

Revenue fell 4 percent to $2.62 billion, missing the market's forecast of $2.65 billion.

Yum has been adding new products, such as its breakfast line at Taco Bell and premium coffee at KFC, to draw consumers and improve sales. It also is seeing gains in newer markets, such as Russia and Africa.

But the company gets much of its revenue from China, where it is still recovering from bad publicity tied to poor food handling by a former supplier. Revenue from stores in China open at least a year fell 12 percent for the period, an improvement from its fourth-quarter decline of 16 percent.

Globally, KFC's total revenue increased 8 percent as it added new sites and revenue from locations open at least a year rose 5 percent.

Taco Bell revenue increased 9 percent, also thanks to new sites and a 6 percent increase from established stores.

Its Pizza Hut division was weaker, with a 2 percent increase in revenue with flat performance from established stores.

Revenue from stores open at least a year is considered a key indicator of performance as it strips away the impact of recently opened and closed sites.

Yum shares rose 4.5 percent in after-hours trading after closing at $80.85. Its shares have climbed 11 percent since the beginning of the year, while the Standard & Poor's 500 index has increased nearly 2 percent.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on YUM at http://www.zacks.com/ap/YUM

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Keywords: Yum Brands, Earnings Report, Priority Earnings

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