Yum China divestment on track

The Yum China divestment is expected to be completed by October 31.

The US fast food giant released the target date along with second quarter figures showing solid sales growth across most Asian markets, especially within the KFC division.

CEO Greg Creed said he was particularly pleased with “the continued sales momentum at KFC China,” which delivered better-than-expected same-store sales growth of 3 per cent.

“Yum! Brands delivered second-quarter (global) core operating profit growth of 7 per cent and earnings-per-share growth, excluding special items, of 9 per cent. Given our strong first-half results and current trends in China, I’m pleased to raise our full-year core operating profit growth forecast to at least 14 per cent.”

Creed said the China result represented its fourth-consecutive quarter of positive same-store sales growth at KFC China.

“Importantly, our China Division is off to a good start in the third quarter for both KFC and Pizza Hut Casual Dining, including a return to positive same-store sales at Pizza Hut in recent weeks.”

Outside of China, challenging industry conditions in the US contributed to soft sales results.

The separation of the China business would create “two powerful, independent, focused growth companies,” said Creed.

“Our capital structure is fully in place and we plan to return a significant amount of capital to shareholders both prior to and after the spin.”

Creed promised further information at an investor briefing on October 11.

Yum China same-store sales were even, with an increase of 3 per cent at KFC, offset by a decline of 11 per cent at Pizza Hut. The China division opened 72 new stores during the quarter, taking its network there to 7246

Meanwhile, in developing Asian markets – including Malaysia, Indonesia and the Philippines – which account for 7 per cent of KFC’s global turnover, sales rose 11 per cent in the quarter and are running 10 per cent ahead of last year for the first half.

In Thailand, which accounts for 3 per cent of KFC’s global turnover, sales rose 17 per cent in both the second quarter and the first half.

And in developed Asian markets – such as Japan, Korea and Taiwan – which accounts for 9 per cent of turnover, sales rose 6 per cent by quarter and half.

Pizza Hut sales in developing Asian markets rose 5 per cent in the second quarter and 3 per cent in the first half. In developed Asian markets, sales fell 7 per cent this year.