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Pizza Hut helps Yum! earnings in 3Q '03

October 7, 2003

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LOUISVILLE, Ky. -- Fast-food giant Yum! Brands Inc. said its Pizza Hut chain had one of its best quarters in same-store sales growth since early 2001, which helped offset a decline at its slumping KFC chain and led to a 12 percent gain in its third-quarter earnings.

According to the Associated Press, the company reported net income of $164 million, or 53 cents per share, for the quarter ending Sept. 6, up from $147 million, or 47 cents per share, in 2002's third quarter.

Excluding a 1-cent charge for special items, the company's 54 cent-per-share earnings beat the 52 cents a share projected by analysts surveyed by Thomson First Call.

Chairman and chief executive David Novak credited the company's performance to stronger-than-expected international same-store sales and solid gains by Pizza Hut and Taco Bell.

Yum opened 213 international restaurants in the quarter, continuing its aggressive global strategy.

Worldwide revenues approached $2 billion for the quarter, 4 percent higher than a year earlier. International revenues rose 10 percent and U.S. revenues edged up 1 percent.

U.S. company-owned same-store sales grew 3 percent for the quarter at Pizza Hut and 2 percent at Taco Bell, but were down 5 percent at KFC.

Yum increased its earnings-per-share projection to at least $2.03 for the year, before special items, Novak said. The company also is confident it will deliver its goal of at least 10 percent earnings-per-share growth in 2004, he said.

Novak said the company is poised to make progress in at least three areas: new restaurant growth internationally, expanded U.S. multibranding and improved U.S. restaurant operations.

Yum had 2,018 restaurants featuring multiple brands by the end of the quarter, up 18 percent from a year ago.

The number of traditional single-brand restaurants declined slightly due to closings of A&W and Pizza Hut restaurants, the company said. It said it expects modest restaurant declines to continue in the near term for the two brands. A&W distribution is expected to grow, however, with its pairing with KFC and Long John Silver's in multibrand restaurants.

Before its quarterly earnings were released, Yum stock rose 34 cents to close at $31.57 Oct 7 on the New York Stock Exchange. The shares gained 98 cents in extended trading.