Yum! Brands Profit Tops Estimate

(RTTNews) - Restaurant operator Yum! Brands Inc. (YUM) said Monday after the markets closed that its fourth quarter profit fell 5% from last year, hurt by higher interest expenses even as revenue grew 1%.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast.

The parent company of Taco Bell, KFC and Pizza Hut reaffirmed its full year guidance of at least 20% earnings per share growth in 2014.

David Novak, Yum! Brands Chairman and CEO, said, "While 2013 was a challenging year, Im pleased to report continued progress as we enter 2014 with fourth-quarter EPS growth of 4%, excluding Special Items. More importantly, with the decisive actions we've taken to strengthen our company across the board, we are well positioned to deliver double-digit EPS growth in 2014 and the years ahead."

Yum! Brands shares are currently gaining 4.67% in after hours trading after closing the day's regular trading session at $66.16, down 99 cents or 1.47. The shares trade in a 52-week range of $59.68 to $78.68.

Total revenue for the company's all-important China division rose 6% to $2.27 billion in the fourth quarter, while same-store sales declined 4%, including a 4% decline at KFC and 5% growth at Pizza Hut. The division's operating profit grew 9% from last year to $220 million.

The company opened 282 new units for the China Division in the fourth quarter, taking the full year total to 740 new units.

Fourth quarter revenue for Yum! Restaurants International division fell 3% to $998 million, while division's same-store sales for the quarter grew 2%. The division's operating profit rose 5% to $235 million.

Total revenue for the company's U.S. division fell 9% to $865 million in the fourth quarter, while same-store sales declined 2%, weighed down by declines of 4% at Pizza Hut and 5% at KFC, partially offset by 1% growth at Taco Bell.. The division's operating profit increased 2% to $182 million.

Effective January 1, 2014, the company combined its Yum! Restaurants International and U.S. divisions into three global brand divisions: KFC, Pizza Hut and Taco Bell. China and India will remain separate divisions given their strategic importance and enormous growth potential.

For the fourth quarter ended December 28, 2013, the Louisville, Kentucky-based company reported net income of $321 million or $0.70 per share, compared to $337 million or $0.72 per share for the year-ago quarter.

Excluding special items, adjusted earnings for the fourth quarter were $0.86 per share, compared to $0.83 per share in the prior year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.80 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total revenue for the fourth quarter grew 1% to $4.18 billion from $4.15 billion in the same quarter last year. Twenty-three analysts had a consensus revenue estimate of $4.26 billion for the fourth quarter.

Worldwide restaurant margin declined 0.2 percentage points to 14.2% in the fourth quarter, including declines of 1.4 percentage points at um! Restaurants International and 0.3 percentage points in the U.S. China restaurant margin increased 0.4 percentage points.

For the full year, Yum! Brands repurchased 10.9 million shares for $750 million.