Yum expects big 1Q profit hit from chicken scare

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Associated Press

Posted on February 5, 2013 at 9:00 AM

Updated Tuesday, Feb 5 at 10:01 AM

NEW YORK (AP) — KFC parent company Yum Brands expects a controversy over its chicken suppliers in China to hammer its first-quarter earnings per share by 25 percent, but the company says it plans to forge ahead with its expansion in the country.

The company, which also owns Pizza Hut and Taco Bell, has been reeling from the chicken supplier issue since a December report on Chinese television. The report said suppliers had been ignoring regulations and giving chickens unapproved levels of antibiotics.

On Monday, Yum warned that a key sales figure would plummet by 25 percent in China in the first quarter. For the fourth quarter, the figure fell 6 percent.

CEO David Novak says he's confident the KFC brand in China will recover eventually but could not say when that would be.

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