On Tuesday, Yum Brands gained 0.98%, despite trading lower over the course of the session, boosted by news that the group would more than double returns to shareholders by 2019. As part of a plan started last year, the group confirmed that it would expand its share buyback plan, including dividends, to $13.5bn. Although it has already bought back about $5.5bn in shares, the group did not give a breakdown on what the split would be between share buybacks and dividends. Looking forward, Yum China is set to complete its spinoff and start trading on the NYSE on the 1st of November 2016.
On Thursday, Yum shed 1.84% following the release of its latest quarterly results. During the quarter, the group recorded a 3% decline in revenue to $3.32bn, lower than estimates of an increase to $3.5bn. This comes after a poor performance by Yum China, which saw same-store sales decline by 1%, sharply lower than expectations of a 4.5% increase. Yum reported adjusted earnings of $1.09 per share, lower than expectations of $1.10 per share. The group remains on track to spin off its China unit in late October, with Yum China expected to start trading as a separate company on the 1st of November.
On Friday, Yum Brands announced Chinese investment firm, Primavera Capital, an affiliate of Alibaba, will buy a stake in Yum China for $460mn. This comes as Yum! prepares to spin off the business, with the deal giving the investors an option to buy an additional 4% stake in Yum China. This will be done in two tranches at valuations of $12bn and $15bn respectively. As it stands, the proceeds of the deal are likely to be used in expanding the group’s presence in China, in-line with Yum’s aim of nearly tripling the amount of stores it has in the country to 20,000. Looking forward, Yum Brands is expected to spin off Yum China on the 31st of October, with Yum China set to begin trading on the New York Stock Exchange a day later.
Yum Brands shed 0.57% on Wednesday, but traded sharply higher in after-hours trade following the release of its latest results. For the quarter, Yum reported revenues of $3.01bn, 3% lower than the $3.1bn reported a year ago and lower than analysts’ expectations of a drop to $3.09bn. In contrast, adjusted earnings came in at 75 cents per share, marginally higher than estimates of 74 cents per share. In China, the group’s largest division, same-store sales were flat, but this was in line with expectations. Lastly, as it stands, China accounts for $1.59bn in revenue and more operating profit than any other division.
Yesterday, Yum! Brands, the parent company of KFC, fell 18% in after-hours trading – after the group missed Wall Street estimates and as Chinese sales came in below expectations. For the quarter, the group saw an adjusted earnings increase to $1, from $0.87 previously, but lower than the expected increase to $1.07. In addition, revenue came in at $3.42bn, missing expectations of an increase to $3.68bn, from $3.35bn a year ago. In China, where it generates more than half of its operating profit, same store sales rose by just 2%, lower than the expected 9.6%, with the group still attempting to recover from a supplier scandal last July.
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