KFC owner continues UK expansion

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The planned expansion of Yum! Brands in the EU, will expand the
market for suppliers to the company's KFC, Taco Bell and Pizza Hut

The company plans to open 725 new restaurants internationally this year, including 100 in the UK and 375 in China. Yum! operates, wholly owns or is in joint ventures with 34,000 restaurantsworldwide.

The company reported a five per cent rise in profits during the second quarter, led by increases in its international division and by lower tax rates. The company's reported net income of $187m (€155m)from $178m (€148m) a year earlier. Sales increased by 3.7 per cent to $2.15bn (€1.8bn).

The company's international division's operating profit increased by 16 per cent prior to foreign currency conversion. When converted to US dollars, operating profit rose by 22 per cent.International sales increased 10 per cent in US dollar terms or by five per cent prior to foreign currency conversion.

International results were also boosted by a $17m gain from an initial public offering of the company's Polish-Czech joint venture.

Operating profits in China decreased by $10m or 30 per cent as the company's KFC restaurants had to withdraw some products after the discovery of a dye banned in certain foods.

In the UK, a key market, sales increased four per cent prior to currency conversion, driven primarily by a seven per cent growth of restaurants in operation.

David Novak, the company's chairman and chief executive, told a media conference last week that 2005 will mark he fifth straight year the company has opened at least 1,000 new restaurants outsidethe US.

"Importantly, we remain bullish on our long-term new-unit growth opportunity for both our China and Yum! Restaurants International Divisions,"​ he said. "...A key growthdriver for the Yum!'s restaurants international division is continued new-restaurant openings across an array of international markets and leveraging the substantial infrastructure in place around theworld."

Meanwhile in the US operating profit for the second quarter declined $9 million or four per cent, primarily due to higher expenses and meat costs.

For the remainder of the year, Novak expects overall company sales to steadily improve along with operating profit.

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