Yum! spins off its China business as KFC and Pizza Hut owner hopes to boost China sales

Clara Guibourg
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Yum!'s China sales have been struggling (Source: Getty)

Yum! Brands is spinning off its China business, following disappointing sales in the country.

The fast food group, owner of KFC, Pizza Hut and Taco Bell, plans to split into two separate publicly traded companies.

Yum has some 6,900 restaurants in China today, but hopes to grow to some 20,000 as more and more of China’s middle class discover its fast food joints.

Sales have been struggling in the country following a meat safety scandal, growing far less than expected, and the company recently cut its earnings outlook for the year.

Yum is hoping that spinning off a China-focused arm will improve its results in the region:

Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies.

This will provide a clear investment thesis and visibility to attract a long-term investor base suited to each business.

The new company, Yum! China, will be led by Micky Pant, according to a statement released today. Greg Creed will remain at the helm of Yum.

Yum has said it is committed to returning “substantial capital” to shareholders on the split.

The company’s shares were up five per cent in pre-trading in New York, after sliding 0.9 per cent since start of the year.

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