KFC Shines, Pizza Hut Finally Rebounds in China

In the midst of the U.S.-China trade dispute, there has been much investor worry over how the impasse would negatively impact consumers in the developing Asian country. While it is coping with an economic slowdown -- which may or may not be the result of the trade war -- it is important to remember that slower economic growth is still growth. The sole licensee of Kentucky Fried Chicken and Pizza Hut, Yum China (NYSE: YUMC), spun off from former parent Yum! Brands (NYSE: YUM) back in 2016, just proved that the development of the Chinese consumer is still healthy -- if not in eating habits, at least financially.

After a rock-solid outing in 2018, results for Yum China have been a bit more muted this year. After a 4% increase in sales in the first quarter of 2019, the top line came in at 3% during Q2. Higher operating expenses driven by wage increases, and food and commodity inflation have kept a lid on the bottom line year to date, but a big rebound was reported in the second quarter with a 28% year-over-year advance. It all adds up to a pretty good first-half performance.

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Quelle Fool.com