Yum's China rebound dimmed by India, Pizza Hut weakness

Wed Jul 16, 2014 5:40pm EDT
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By Lisa Baertlein

(Reuters) - Yum Brands Inc on Wednesday said its KFC business bounced back in China, its No. 1 market, but its stock fell more than 2 percent in extended-hours trading on disappointing quarterly results from its India, Taco Bell and Pizza Hut divisions.

Yum's sales at established restaurants in China increased 15 percent in the second quarter, including a 21 percent jump at KFC and flat results at Pizza Hut Casual Dining.

Analysts polled by Consensus Metrix had forecast that Yum's China sales would climb 11.4 percent.

An avian flu outbreak and a food-safety scare last year battered Yum's restaurant results in China, which contributes more than half of the company's overall sales. Yum's China division same-restaurant sales tumbled 20 percent in the second quarter last year.

Yum recently revamped its KFC China product lineup to attract more diners. Yum's China Division, which had 6,387 mostly KFC restaurants at the end of the second quarter, contributed 35 percent of the company's total operating profit last year.

The India division's same-restaurant sales fell 2 percent, versus the 1.6 percent gain that analysts expected.

Yum has been in India for more than a decade. It had 714 total units in the country at the end of the second quarter, including KFC, Pizza Hut and Taco Bell restaurants.

India is a competitive environment and Yum is "investing aggressively" in that market, spokesman Jonathan Blum told Reuters.   Continued...

KFC's staff wait for customers at its restaurant in Beijing October 9, 2013. REUTERS/Kim Kyung-Hoon