Yum Brands Rises 4% As Q1 Tops Expectations

Yum! Brands, Inc. (NYSE: YUM) reported 8 percent increase in net income to $391 million in the first quarter from $362 million while earnings grew 14 percent to $0.93 a share from $0.81 a share in the year-ago quarter. Excluding special items, its earnings would have been $0.95 a share, which is $0.12 a share more than the Street estimation $0.83 a share.

Total revenues were flat at $2.62 billion for the first quarter. The company's same-store sales advanced 6% compared to a fall of 12 percent in the previous year quarter. Its China Division system sales grew 11 percent excluding foreign currency translation while same-store sales in China grew 6 percent driven by KFC, which was partly offset by weakness in Pizza Hut Casual Dining.

Commenting on the results, Yum Brands CEO, Greg Creed, said "I'm very pleased with our results in the first quarter, including better-than-expected core operating profit growth of 21%, driven by 42% growth in our China business. KFC China had an outstanding Chinese New Year bucket promotion leading to 12% same-store sales growth for the quarter, underscoring the power of delivering insight-driven marketing that resonates with our customers. Companywide, all four of our Divisions posted positive same-store sales and core operating profit growth. I'm especially encouraged by the continued turnaround of our Pizza Hut U.S. business, which delivered 5% same-store sales growth."

As far as the outlook, the CEO stated, "While it's early in the year and there may be bumps in the road, we're confident in raising core operating profit growth guidance to 12%, from 10% previously. This is a transformational year for our company as we remain on track to finalize the separation of our China business by year end. We look forward to establishing two powerful, independent, focused growth companies dedicated to building on our brand strengths and rewarding our shareholders."

On Wednesday, the stock closed with 0.45 percent gain and shares were up about 4 percent at $86 in the pre-market session