Yum! Brands' profit slump in its China business will be short-lived, company says; company's operating profit in nation fell 4% in Q2 amid rising commodity and labor costs

Nevin Barich

LOUISVILLE, Kentucky , July 19, 2012 (Associated Press) – Yum Brands says a profit slump in its fast-growing China business will be short lived, and the fast-food company remains upbeat about its prospects there.

Operating profit in China sagged 4 percent in the second quarter, adjusted for currency fluctuations. Yum points to rising commodity and labor costs, plus higher start-up costs for its record pace of restaurant openings in China.

Yum Chairman and CEO David C. Novak told industry analysts Thursday that the Chinese economy is slowing and retail sales there will likely soften. But he said Yum expects sales growth in the mid-single-digit range at established stores in China in the year's second half.

Yum Brands Inc. subsidiary KFC is a leading fast-food chain in China.

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