Weak Chinese Sales Eat into Yum! Brands' Q4 Earnings (YUM)

Weak Chinese Sales Eat into Yum! Brands’ Q4 Earnings (YUM)


Quick service restaurant company Yum! Brands, Inc. (YUM) reported declined earnings for the fourth quarter, mainly due to disappointing earnings in China.

The Louisville, KY based company reported fourth quarter earnings of $337 million, or 72 cents per share, down from $356 million, or 75 cents per share last year. Adjusted earnings came in at 83 cents per share, narrowly beating estimates of 82 cents.

Revenue for the quarter increased to $4.15 billion from $4.11 billion last year. Analysts expected to see $4.12 billion in revenue.

A large portion of the company’s profits come from the China division, which suffered during the quarter, leading to a negative impact on YUM’s earnings.

Due to “adverse publicity” in the country due to chemical residue found in chicken, revenue within China fell by -37%. This drop included a -41% decline for KFC and a -15% drop for Pizza Hut. YUM currently has 5,300 restaurants in China, making the region responsible for 40% of its profits. The company apologized to the residents of China in the beginning of January for the food scare.

As a result of the company’s decline in total earnings, YUM now expects to see a “mid-single digit” percentage decline for FY2013 earnings. Analysts are expecting a 10% drop in growth.

Yum! shares were down $4.05, or -6.33% during premarket trading Tuesday. The stock has been mostly flat in the past year.

The Bottom Line
Shares of Yum! Brands, Inc.(YUM) have a 2.10% yield, based on Monday’s closing price of $63.94 and the stock’s annualized dividend payout of $1.34 per share.

Yum! Brands, Inc.(YUM) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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