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Yum Brands Inc (NYSE: YUM) on Wednesday said the owner of fast food brands like KFC and Pizza Hut missed quarterly earnings estimates as increased costs of ingredients, labor and packaging material took a bite out of the profit.
Although the restaurant group has been increasing the prices of tacos, fried chicken and pizzas, Yum could not fully counter the blow from a 4% increase in overall expenses.
The war in Ukraine has put supply chain constraints which led to a surge in commodity prices.
The company said comparable sales rose 1%, with Taco Bell posting a better-than-expected 8% increase, making up for a slowdown in sales at KFC and Pizza Hut.
Excluding one-off charges, Yum earned $1.05 per share for the second quarter ended June 30, compared with estimates of $1.09 per share.
Quarterly net income slumped 43% to $224 million, or 77 cents per share, as income tax provision increased over tenfold to $166 million.
The company said a strong US dollar shaved $23 million off its operating profit for the quarter.
Yum also reiterated that the company was in the advanced stages of selling its KFC business in Russia to a local operator, who would rebrand the fried chicken restaurants.
Picture Credit: Medium
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