Despite the slowing of the economy, the owner of Yum Brands predict that its fast growing China business will have another strong profit growth next year. There will also be more menu options in the coming year for Taco Bell in the U.S. Yum’s stock rose more than 8% to $71 in afternoon trading. The executives are confident that they will gain 15% profit growth in China next year. Analysts are forecasting a rebound in China late this year or in early 2013 after the economic growth fell to 7.6% this past spring. That turnaround in China, couples with strong profit growth at its restaurants in the U.S. and else ware around the world, helped Yum post a 23% increase in its third-quarter net income. China has 4,000 KFCs and has ramped up its breakfast offerings. Pizza Hut has a growing presence there too. In the U.S., Taco Bell has been the catalyst behind Yum’s strong performance. Third-quarter operating profit in the U.S. rose 13 per cent. Sales in U.S. restaurants open at least a year rose by 7% at Taco Bell in the quarter. This year alone, Yum expects to open up at least 750 stores in China. Yum has more than 38,000 restaurants in more than 120 countries and territories.
“But as I’ve said before, China is going to have its inevitable ups and downs. … We now face a slowing economy. But that doesn’t change our long-term outlook in China one iota,” Yum Chairman and CEO David C. Novak told industry analysts Wednesday. People still have hope for China and its long term growth potential. By owning our China fund, investors will gain investment exposure to one of the fastest growing regions in the world and benefit from the strengthening currency of China. And if the risk is too high for certain clients, our Blue Chip is another option where Yum brands is constantly on the radar. With our Blue Chip, investors are able to participate in the growth of the economies with lower volatility. So, you get the best of both worlds; the stability of the developed worlds, U.S and Canada, and the growth from the Emerging Markets.
Written by Melissa W.