Yum! Brands, which owns chains like Pizza Hut and Kentucky Fried Chicken, is recovering slower than expected from a Chinese food scandal. The company has therefore lowered its full-year profit forecast.
Despite slight turnover and net profit growth
In the third quarter, the American company did see a 3 % turnover growth to 2.97 billion dollars (2.6 billion euro) and a 4 % net profit to 421 million dollars (370 million euro), but those results are lower than what both the company and analysts had expected.
The reason for this slower growth can be found in China, where Yum! Brands generates more than 50 % of its turnover. Not only the slower economic growth harms the company, but a recent food scandal revolving around meat that had surpassed its expiration date still has its impact. Kentucky Fried Chicken has some 4,900 restaurants in China.
Those disappointing results prompted CEO Greg Creed to adjust his profit forecast downward. Yum! Brands expected a growth of at least 10 % earlier this year, but it will be "considerably less" now. Immediately after its profit alert, its share on the stock exchange got pounded 18.8 %.