Food Business News - October 23, 2012 - (Page 22)

Strong China results boost Yum! earnings Taco Bell’s Doritos Locos and Cantina Bell menu items drive U.S. operating profit world is occurring today. This growth, combined with the fact that we have powerful global brands and only two restaurants per million people in the emerging markets compared with 58 restaurants per million people in the U.S., gives us tremendous confidence in our ability to continue our aggressive expansion. “Further, I would not trade our opportunity to grow same-store sales with anyone. We have 38,000 restaurants with underutilized assets. We are laying the foundation for more substantial same-store sales growth by developing breakfast, beverages, and broader menu variety that will leverage our existing restaurants and improve asset utilization over time. Meanwhile, our returns continue to be among the best in the restaurant industry with return on invested capital over 22%.” Operating profit in the company’s U.S. division totaled $162 million in the third quarter, up 13% from $143 million in the same period a year ago. Total revenues fell 10% to $787 million from $873 million, while same-store sales increased 6%, including growth of 7% at Taco Bell, 6% at Pizza Hut and 4% at KFC. Total sales were down because of the divestiture of Long John Silver’s and A&W All American Restaurants in 2011. “As the largest U.S. brand, Taco Bell has been the catalyst of our 2012 U.S. performance,” said Rick Carucci, president of Yum! Brands, Inc. “The brand has made great strides with key product introductions of Doritos Locos Tacos and Cantina Bell. The good news is that these initiatives not only delivered strong sales this year, but should drive sales in 2013 with new flavor varieties and line extensions to complement our current menu.” Mr. Carucci added that one of the reasons Yum! Brands has pushed the introduction of new flavors of the Doritos Locos Tacos into 2013 is because the launch of the product was so successful the company used up its available supply of taco shells. Taco Bell also is benefiting from the introduction of its Cantina Bell menu. Mr. Carucci said lunch time traffic has increased and people who buy products off the Cantina Bell menu are paying more. “We think that the fast casual guy sort of taught us a lesson, which is if people want very high quality food that they are willing to spend more money for it if they get speed and convenience,” he said. “Obviously, with the distribution that we have of restaurants around the country, we are able to do that.” Third-quarter operating profit within the China division rose 24% to $374 million from $301 million, while sales increased 24% to $1,988 million from $1,600 million. Same-store sales in China increased 6%. Yum! said it opened 192 new units in China during the third quarter and expects a record new-unit development of at least 750 units during fiscal 2013. Operating profit in the Yum! Restaurants International division totaled $173 million in the third quarter, up 7% from $163 million in the same period a year ago. Total sales eased 1% to $769 million from $779 million. As a result of the strong third quarter, Mr. Novak said Yum! Brands is raising its fullyear e.p.s. growth forecast to at least 13%, or at least $3.24, excluding special items. FBN LOUISVILLE, KY. — Strong sales and exceptional strength in China helped drive a 23% increase in earnings at Yum! Brands, Inc. in the third quarter. Net income in the period ended Sept. 8 totaled $471 million, equal to $1.02 per share on the common stock, up from $383 million, or 82c per share, in the same period a year ago. Total revenues rose 9% to $3,569 million from $3,274 million. For the nine months ended Sept. 8, net income was $1,260 million, or $2.72 per share, up 31% from $963 million, or $2.05 per share, in the same period a year ago. Net sales were $9,480 million, up 11% from $8,515 million. “As you know, there are three keys to driving shareholder value in retail — new unit development, same-store sales growth, and high returns,” said David Novak, chairman and chief executive officer, in an Oct. 10 conference call with financial analysts. “Our new unit opportunity in China is the best in retail and our opportunity to expand is now bigger than ever throughout the emerging markets. As I said before, Yum! Brands is about China and so much more. “As evidence, about 60% of our profit is generated in emerging markets, which is where the real economic growth in the 22 FOODBUSINESS NEWS ® October 23, 2012 3,

Table of Contents for the Digital Edition of Food Business News - October 23, 2012

Food Business News - October 23, 2012
Private label penetration forecast to grow in U.S.
Softer demand slows rate of Nestle sales growth
Drought’s impact becomes clearer
Table of Contents
Web Contents
Editorial - Food issues dampened before election
Culver acquisition boosts B&G third-quarter income
Foreign exchange rate cuts into McDonald’s earnings
Structural changes cut into PepsiCo sales in third quarter
Legislation proposed to track antibiotic use on farms
Dean Foods posts preliminary WhiteWave-Alpro results
California poultry processor files for Chapter 11 protection
Peapod testing virtual grocery stores in the Northeast
Shell egg prices push Cal-Maine income up sharply
ConAgra to close pork processing plant
Cereal Partners Worldwide to reduce sugar, sodium
Frozen food sales projected to remain sluggish
New food safety effort targets consumers
ConAgra Foods looks to heighten focus on nutrition addition
Cholesterol profile of U.S. adults improving
Food and beverage C.P.I. increases in September
Strong China results boost Yum! earnings
Global Greek yogurt introductions accelerate
Sunland recall reverberates throughout the industry
JBS USA has option to acquire XL Foods
Washington - F.D.A. issues guidance for food facility registration
Sports Nutrition - Broadening the appeal for sports nutrition products
Ingredient Innovations - Ushering in the next generation
Convenience Store Trends - On-the-go gourmet
Beverage Business News - Looking for a Pepsi rebound
Old Orchard debuts frozen sweet tea line
Red Bull to add fruit-flavored energy drinks
Lawsuit takes aim at New York’s 16-oz beverage rule
Coca-Cola profit climbs on volume growth
Beverage industry embraces calorie counts on vending machines
Journal report links sugary beverages to obesity
Tingyi partnership poised for flight
Beverage still tops at Pepsi...barely
Beverage Trends - An (energy) shot in the arm
New Food Products
Ingredient Market Trends - CME Group to acquire the K.C.B.T
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - October 23, 2012