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Yum! Brands’ third-quarter net income declines 68 per cent

Same-store sales fell by 11 per cent in China.

Yum! Brands, the owner of fast food chains KFC, Pizza Hut and Taco Bell, has posted a net income of $152m for the third-quarter ended 7 September 2013, a decline of 68 per cent compared to $471m for the same period last year primarily due to weak sales in China.

Region wise, the company’s China division operating profit declined by 11 per cent to $335m (2012: $374m) due to the impact of adverse publicity surrounding the December poultry supply incident and subsequent news of Avian flu.

During the quarter, China division opened 132 new units.

US division operating profit grew by 1 per cent to $164m (2012: $162m), while Indian division system sales grew by 20 per cent. Moreover, the company’s Little Sheep business has not performed up to expectations since the acquisition of a controlling interest in February 2012.

Same-store sales fell by 11 per cent in China, while they grew by 1 per cent at YRI division and were flat in the US.

Overall revenues declined by 3 per cent to $3.46bn (2012: $3.56bn), while operating profit fell by 48 per cent to $350m (2012: $671m).

David Novak, chairman and CEO of Yum! Brands, said: “Given a slower-than-expected sales recovery at KFC China and a higher-than-expected tax rate, we are now estimating a high-single to low-double-digit percentage decline in full-year EPS versus prior year, excluding Special Items.”

The company has nearly 40,000 restaurants in more than 130 countries and territories.