Yum China saw its net income increase 14 percent during the second quarter of fiscal year 2018.

The parent company of KFC and Pizza Hut in China on August 1 announced that its net income rose from $125 million to $143 million for the period that ended June 30.

That increase was helped by a 3 percent year-over-year growth in total system sales. KFC sales grew by 5 percent, while Pizza Hut sales dropped by one percent. The company opened 164 new restaurants during the quarter, bringing the total count to 8,198 locations in more than 1,200 cities, the company stated in a press release.


"KFC achieved 5 percent system sales growth in the second quarter as a result of solid business fundamentals and accelerated new store development.  We are on track to add 600-650 new stores, led by KFC, by the end of the year,” said Joey Wat, CEO of Yum China. “This growth strategy will set us up for long-term growth in both profitability and market share.  We are confident in the sustainability of KFC's leader position in the QSR market in China.  While Pizza Hut continued to face challenges in China's competitive casual dining space, we added new talent to our team and made progress repositioning the brand with our target customers. We remain dedicated to revitalizing the brand and strongly believe that our initiatives including delivering more innovative products and introducing new store formats will restore the brand to the level of consistent growth that our shareholders expect."

"Yum China reported total revenues and operating profit growth of 12 percent and 13 percent, respectively, in the second quarter. We will continue to invest in strengthening our core competencies as well as building delivery, digital and data capabilities to capture online and offline opportunities and drive future growth," added Wat.

"In an increasingly competitive environment, we stepped up food investment and promotional activities, which inevitably had some pressure on our margins. This reflects our strategic decision to invest in our brands for long-term market share gain. Our business continues to generate substantial free cash flow, and during the second quarter, we returned over $110 million of cash to our shareholders through share buyback and dividends. We remain committed to creating enduring value for our stockholders," remarked Jacky Lo, chief financial officer of Yum China.