- Julie GraberYum! Brands, parent company to KFC, experienced drops in net income for fiscal year 2014 and its fourth quarter of 2014.
Yum! Brands reported a net loss of $86 million for the fourth quarter of fiscal year 2014, but for the year, the company experienced a net income of $1.05 billion. Both are down from the company’s performance in 2013, when Yum! Brands posted a net income of $321 million for the fourth quarter and $1.09 billion for the year.
Yum! Brands, the parent company of KFC, Pizza Hut and Taco Bell, aims to recover after it experienced a loss in sales when consumer confidence was down in 2014 after an incident in China where a supplier to KFC and Pizza Hut locations in China allegedly repackaged expired meats with false expiration dates.
Also cutting into the company’s net income was a $361 million charge related to Little Sheep, a Chinese fast-food chain the company acquired in 2012. The company stated the Little Sheep business has performed below expectations since it was acquired. Yum! Brands previously took a charge of $258 million related to Little Sheep in 2013, and the company said the remaining carrying value of the business is about $100 million.
The company said system sales in its KFC division rose 6 percent in 2014; Pizza Hut system sales rose 1 percent, and Taco Bell system sales rose 4 percent.
Greg Creed, CEO of Yum! Brands, said the company anticipates "a strong second half of 2015 as the turnaround gains momentum."