Yum! reports strong grilled chicken and Australian sales

Posted by Isobel Drake on 16th July 2009

Yum! Brands, the woner of the KFC and Pizza Hut franchises – has reported operating profit growth of 11% in the second quarter after stripping out the negative impact of currency translation, with Australia again a strong region for the company.
The growth was led by international development, with 328 new restaurants opening outside the US and sales growth in the mid-single digits. Their American business remained subdued, however, recording a 1% decline in sales.

Profit was up worldwide thanks to improved margins as a result of prior year pricing, flat commodity costs and refranchising.

David Novak, Chairman and CEO of Yum!, was pleased with the results, which came in above expectations. “Our global portfolio delivered solid performance with system sales growth of 3% and operating profit growth of 11%, prior to foreign currency translation,” he noted. “Our industry leading international new unit development continues to be a major driver of operating performance in both China and Yum! Restaurants International. This capability is unique to the industry and helps us consistently achieve our growth targets.”

Their Australian operations continued to reach high single digit growth, with sales up 7 per cent in the second quarter.

“I’d like to commend the teams in KFC UK, Australia, and Japan for driving stellar sales growth in mature economies that are clearly going through a tough patch,” Mr Novak stated.

Despite the disappointing performance of their recession-hit home market, the company was delighted with the response to their new grilled chicken offering.

“We were particularly pleased by KFC’s dramatic results from the Kentucky Grilled Chicken launch which broadened the appeal of the brand and led to a substantial positive turnaround in KFC same-store-sales performance from a decline of 7% in the first quarter,” Mr Novak advised.

Yum! is also intending on expanding beyond pizza at Pizza Hut, with more pasta and chicken options to provide broader line of home meal replacement options.

“We expect to enter 2010 with even stronger brands and competitive positions everywhere we do business. Longer term, the fundamental opportunities for our global portfolio remain intact and give us the unique ability to generate unparalleled international growth, significant free cash flow, and an industry-leading return on invested capital,” Mr Novak concluded.