Ahead of the Bell: Yum Brands
NEW YORK (AP) — Investors are hoping to see a rebound in profit from operations in China when Yum Brands Inc. reports its fiscal third-quarter earnings after Tuesday's closing bell.
The owner of the Taco Bell, Pizza Hut and KFC chains had traditionally gotten a boost from increased Chinese demand, but that streak ended in the second quarter when adjusted operating profit at its Chinese operations fell 4 percent.
The China business had strong sales growth in the quarter, but inflation reduced its profit. Yum pointed to rising commodity and labor costs, plus higher start-up costs for its rapid pace of restaurant openings in China.
The Louisville, Ky.-based company has said the downturn would be temporary, and predicted a return to double-digit profit growth in China in the second half of the year.
Meanwhile, the company remains a top player in the U.S. fast-food industry, a sector that is closely watched as an indicator of spending trends among consumers still worried about jobs and the economy.
Yum operates more than 37,000 restaurants in more than 110 countries and territories. Analysts polled by FactSet expect it to report an adjusted third-quarter profit of 97 cents per share on revenue of $3.66 billion.