Yum China Shares Drop Amidst Disappointing Third-Quarter Results
Yum China’s shares experienced a significant decline in Hong Kong as the company announced its third-quarter results, which fell short of expectations. In addition to this, the company also issued a warning regarding a decline in consumer demand.
The stock plummeted to a 12-month low of 348 Hong Kong dollars (US$44.48) on Wednesday morning, paralleling its underperformance on the New York Stock Exchange overnight.
Yum China, the company that owns popular fast-food brands such as Pizza Hut and KFC in China, reported an 18% increase in its net income for the third quarter, reaching US$244 million. However, this figure fell short of the consensus estimate of US$278.0 million derived from a FactSet poll of analysts.
The adjusted diluted earnings per share came in at US$0.59, below the expected adjusted earnings of 65 U.S. cents a share as forecasted by analysts surveyed by FactSet.
Andy Yeung, the Chief Financial Officer of Yum China, acknowledged a decline in consumer demand that began in late September and continued throughout October.
Looking ahead, Yeung mentioned that the fourth quarter is typically a smaller quarter in terms of sales and profits. Consequently, even slight fluctuations in sales during this period can greatly impact the company’s margins.
Currently, shares of Yum China are down by 13.0% at HK$357.80, indicating the sharpest daily drop observed since March of last year.