Company said initial results of Taco Bell's national breakfast launch were positive during the second quarter.


LOUISVILLE, KY. — Yum! Brands, Inc. remains confident in achieving its full-year target of at least 20% earnings per share growth. During the company’s second quarter, KFC sales in China rebounded from last year’s spate of negative publicity and effects of avian influenza. In addition, initial results of Taco Bell’s breakfast launch were positive, driving same-store sales growth of 2% in the United States. But Pizza Hut's performance continued to disappoint.

“At Pizza Hut, although second-quarter results were disappointing, we are taking significant actions in our U.S. business to reignite sales and expect to make substantial progress balance of year,” said David Novak, chairman and chief executive officer.

Three keys to improving shareholder value at Yum! include new-unit development, same-store sales growth, and generating high returns on invested capital. During the quarter, the company opened a total of 298 new international units, 78% of which were in emerging markets, and achieved worldwide system sales growth of 6%.

For the second quarter ended June 14, Yum! earned $334 million, equal to 75c per share on the common stock, up 19% from $281 million, or 62c per share, in the prior-year period.

Revenues totaled $3,204 million, up 10% from $2,904 million.

Efforts to improve the Pizza Hut business in the United States include the recent debut of Hershey's chocolate chip pizza cookie.


Operating profit for the KFC division increased 7% to $155 million, and revenues climbed 7% to $754 million, reflecting strength in international markets that offset a 2% decline in U.S. same-store sales.

In the Pizza Hut division, operating profit fell 22% to $63 million. Revenues dropped 1% to $265 million. International same-store sales moderated in emerging markets and declined 2% in developed markets, while U.S. same-store sales fell 4%.

The Taco Bell division posted a 2% decline in operating profit to $109 million, driven by commodity inflation, investments in breakfast and sales deleverage in other day parts. Revenues dropped 3% to $439 million.

In China, operating profit soared 188% to $194 million, and revenues advanced 18% to $1,709 million. The India division reported operating loss of $1 million, up from a loss of $4 million in the prior year, and $37 million in total revenues, up 12% from the comparable quarter.

For the first half of the year, Yum! had net income of $733 million, equal to $1.64 per share on the common stock, up 19% from $618 million, or $1.36 per share.

Revenues for the six-month period totaled $5,928 million, up 9% from %5,439 million.