February 7, 2018 / 9:47 PM / a year ago

Yum China beats estimates on KFC, but Pizza Hut disappoints

(Reuters) - Yum China Holdings Inc (YUMC.N) edged past analysts’ profit and revenue estimates on Wednesday, but the company’s shares fell as its Pizza Hut unit missed same-store sales expectation.

FILE PHOTO: People walk past a KFC store in downtown Shanghai July 31, 2014. REUTERS/ Carlos Barria/File Photo

The company’s shares were down 4.6 percent at $42.25 in after-market trading. The stock had gained about 53 percent in 2017.

“While we finished 2017 with a solid sales momentum, we continue to face challenges of the revitalization of Pizza Hut and lapping of two very successful Chinese New Year promotions,” said Chief Operating Officer Joey Wat.

Joey Wat is scheduled to take over as chief executive in March, when current chief Micky Pant steps down.

Pizza Hut has been a drag on the company’s performance, offsetting gains from stronger growth at the company’s KFC unit.

Same-store sales in the Pizza Hut division rose 1 percent in the fourth quarter ended Dec. 31, below analysts’ estimate of a 1.5 percent gain, according to Thomson Reuters I/B/E/S.

In contrast, same-store sales at KFC rose 7 percent, trouncing estimates for a growth of 4 percent.

Total same-restaurant sales jumped 5 percent in the quarter, beating analysts’ expectation of a 3 percent increase.

Yum China, the country’s biggest fast-food chain with over 7,685 outlets, reported a loss of $90 million, or 23 cents per share, compared with a profit of $88 million, or 23 cents per share, a year earlier.

The company incurred an estimated one-time income tax charge of $164 million in the fourth quarter due to the recent changes to the U.S. tax law.

Excluding the tax gain and other one-items, the company posted a profit of 19 cents, beating analysts’ estimate of 18 cents.

Net sales of the company, which also operates the Taco Bell chain, rose 12.6 percent to $2.2 billion, just above analysts’ average estimate of $2.15 billion.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Sriraj Kalluvila

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