Yum! Profit Misses Estimates As China Sales Falter

(RTTNews) - Restaurant operator Yum! Brands Inc (YUM) on Wednesday reported fourth-quarter net loss of $86 million or $0.20 per share compared with a profit of $321 million or $0.70 per share last year. Results were hurt by lower sales in China and increased expenses, Yum said.

Yum said its results for the recent quarter included a non-cash, special items net charge of $361 million related to the write-down of Little Sheep assets.

Excluding items, Yum's adjusted earnings for the quarter were $0.61 per share compared with $0.86 per share a year ago.

Revenues for the quarter were down 4% at $4 billion compared with $4.18 billion in the prior year.

Analysts polled by Thomson Reuters estimated earnings of $0.66 per share on revenues of $3.97 billion for the quarter. Analysts' estimates typically exclude special items.

Sales in China slid 12% from last year, the company said. But other divisions gained. Sales at the company's KFC division sales climbed 4%, Pizza Hut gained a modest 1%, and Taco Bell rose 8%.

Total expenses for the quarter were up 12% from a year ago to $4.04 billion, the company said.

CEO Greg Creed said that results in 2014 were disappointing as the Chinese supplier incident in July offset strong first half of the year. Creed said Yum's focus is to recover sales in China and capture the significant profit leverage in this business.

"We are committed to restoring our track record of delivering at least 10% annual EPS growth year after year. I am confident we will do this in 2015 as our China business recovers and we sustain positive momentum across the rest of Yum!," Creed said.

Creed further said that while the sales recovery in China continues to be slower than expected, Yum anticipates a strong second half of 2015 as the turnaround gains momentum.