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Yum! Brands expects Chinese investigation to hurt profits

Written January 8, 2013
Poultry Processing & SlaughterBroilers & Layers

Publicity could have negative impact

Yum! Brands Inc. said it expects KFC's sales in China to suffer because of a recent government investigation of its poultry.

The company announced in late December that the Chinese government was conducting a review of two poultry suppliers who provided chicken with unapproved levels of antibiotics to KFC. While the supplies represent a small percentage of the company's product, the publicity did slow sales.

Yum! Brands said that due to the bad publicity associated with the review, it expects a key sales measure for KFC in China will come in lower than expected. It expects revenue from its stores in China open at least a year will be down 6 percent for the fourth quarter of its 2012 fiscal year, as opposed to its prior forecast of a 4 percent decline.

Yum! expects to earn $3.24 for the full fiscal year on an adjusted basis. The company declined to comment further until it releases its full quarterly results on February 4.

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