December 5, 2013

 
Yum! Brands set to recover in 2014

Yum! Brands Chief Executive Officer (CEO) forecasts a "strong bounce-back" in 2014 as it has seen a recovery in its sales in China.

In advance of its Annual Investor Meeting, Yum! Brands Inc. has reconfirmed its full-year 2013 Earnings Per Share (EPS) forecast of high-single to low double-digit decline versus prior year, excluding special items.

David C. Novak, Chairman and CEO, said: "We expect to have a strong bounce back in 2014 following a year that is clearly below our high expectations. In China, we have an aggressive plan to reignite sales at KFC and we expect continued strong performance at Pizza Hut Casual Dining."

Yum! expects to deliver at least 20% EPS growth in 2014, excluding special items. It aims an operating profit growth of at least 40% for China Division. The company plans to open at least 1,850 new international units, including: 700 new units in China, 150 new units in India, at least 600 new units at KFC, and 400 new units at Pizza Hut.

In 2014, the company targets a global capital expenditure of US$1.2 billion, a worldwide G&A increase of about 4% and an estimated tax rate for years 2014 to 2016 between 26% and 28%.

"Importantly, with our recent announcement to combine our Yum! Restaurants International (YRI) and US individual divisions for KFC, Pizza Hut and Taco Bell, effective January 1, 2014, we are well positioned to more aggressively accelerate growth in the years ahead. We remain focused on the three keys to driving shareholder value: new-unit development, same-store sales growth and generating high returns on invested capital," Novak added.

November same-store sales increased an estimated 1% for the China Division. This estimate included even sales at KFC and 7% growth at Pizza Hut Casual Dining.

It is important to note a limited-time "Half Priced" bucket promotion yielded an approximate 16% increase in KFC same-store sales for the first 10 days of the month. KFC same-store sales were down approximately 8% for the remainder of November. This particular promotion will not be repeated in December.