Tags: Yum | Profit | China | Chicken

Yum Lowers Profit Forecast on China Chicken Probe

Monday, 04 Feb 2013 05:34 PM

 

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Shares of Yum! Brands Inc., owner of the KFC and Pizza Hut dining chains, fell in late trading Monday after the company said profit this year will be less than it previously expected as a probe into its chicken suppliers hurt sales in China.

Yum shares were down 5.6 percent at $60.20 in aftermarket trading. During the regular trading day, the shares sank 3 percent. The Louisville, Kentucky-based company’s shares gained 13 percent last year, while the Standard & Poor’s 500 Restaurants Index dropped 2.6 percent.

Profit excluding certain items will decline this year, down from a previous estimate for growth of 10 percent, the company said Monday in a statement. Profit last year was $3.25 a share. Analysts on average estimated 2013 profit of $3.57 a share.

Yum, which is planning to open 700 stores in China this year, has been trying to win back Chinese consumers after a food-safety scandal involving a former chicken supplier. Sales at locations open at least 12 months in the Asian nation fell 6 percent, the first quarterly drop in three years. Analysts forecast a decline of 6 percent, the average of 22 estimates from Consensus Metrix.

The fast-food company got about 44 percent of 2011 revenue from its stores in China.

© Copyright 2014 Bloomberg News. All rights reserved.

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