Louisville: Yum Brands Inc , owner of KFC and Pizza Hut chains, on Tuesday said business in its biggest market China is recovering from a meat scare at one of its minor suppliers and that the division would finish the year strong.
Yum`s comments on China, its No. 1 market for revenue and profit, sent company shares up 4.3 percent to $84.34 in extended trading.
Yum said China sales at established restaurants fell less than expected for the first quarter as it works to recover from allegations of a food safety scandal involving a minor supplier.
Yum is making "continued progress" in China, Chief Executive Greg Creed said in a statement.
"We will deliver full-year EPS growth of at least 10 percent, with a strong second half in China and solid brand-building initiatives under way at each of our divisions," Creed said.
Same-restaurant sales in China, where Yum is the biggest Western brand with nearly 6,850 establishments, declined 12 percent for the latest quarter on continued fallout from allegations that a former supplier used expired meat. The quarter`s results included declines of 14 percent at KFC and 6 percent at Pizza Hut Casual Dining.
Analysts polled by Consensus Metrix had expected China sales to drop 14.4 percent.
Yum China`s same-restaurant sales fell 16 percent for the fourth quarter and were down 14 percent in the third quarter. They were up 15 percent in the second quarter, which ended roughly a month before news of the supplier scandal broke on July 20.
Yum`s China first quarter included only the months of January and February, while Yum Brands` first quarter ran from Dec 26 to March 21.