KFC and Pizza Hut owner Yum Brands! cuts profit forecast for the second time this year after China food scare


Maria Tadeo@mariatad
Wednesday 10 December 2014 11:57

Yum Brands!, the American fast food company behind Pizza Hut and KFC, has lowered its profit guidance for the year for the second time this year following a food scandal in China.

The group said it expects full-year profit growth to be in "mid-single-digit" region, down from a previous forecast of 10 per cent in October, citing a slowdown in sales in China.

This is the second profit warning for Yum, which was targeting growth of 20 per cent at the start of the year. Shares fell more than 6 per cent in after-hours trading in New York.

KFC was hit by a food scare scandal over the summer after one of its Shanghai suppliers, Husi Food, was accused of selling rotten chicken and operating in unhygienic conditions.

An undercover television report showed footage of Husi employees allegedly picking up food from the floor and falsifying expiry dates on meat, which were then sold to a number of fast food chains including KFC, Pizza Hut and McDonald's.

Yum said the allegations had impacted its business in in China, where it expects growth to be in the "negative mid-single digits" with sales picking up at a "slower pace than expected".

"China division sales were significantly impacted by adverse publicity in July regarding improper food handling practices by a former supplier," Yum said in a statement on Tuesday.

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