Yum China Holdings (YUMC) reported $2.49 billion in revenue for the quarter ended December 2023, representing a year-over-year increase of 19.4%. EPS of $0.25 for the same period compares to $0.13 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $2.37 billion, representing a surprise of +5.23%. The company delivered an EPS surprise of +92.31%, with the consensus EPS estimate being $0.13.While investors closely watch year-over-year changes in headline numbers -- revenue and earning ...

Financial Performance - In Q4 2023, Yum China reported a 21% increase in system sales, driven by a 12% contribution from net new stores and a 4% same-store sales growth[2]. - The total revenue for 2023 reached $10.98 billion, marking a 19% increase in Q4 and a 21% increase when excluding foreign currency impacts[3]. - Operating profit for the year grew by 76% to $1.1 billion, with core operating profit increasing by 79%[3]. - Net profit for 2023 was $827 million, up 87% from $442 million in 2022[6]. - Total revenue for the year ended December 31, 2023, was $10,978 million, representing a 15% increase from $9,569 million in 2022[19]. - Company restaurant revenue for the fourth quarter of 2023 was $2,343 million, up 19% from $1,975 million in the same quarter of 2022[19]. - Operating profit for the year was $1,106 million, a 76% increase compared to $629 million in 2022[19]. - The effective tax rate for the year was 26.9%, down from 30.1% in the previous year, a decrease of 3.2 percentage points[19]. - Basic earnings per share for the fourth quarter were $0.23, compared to $0.13 in the same quarter of the previous year[19]. - Net profit for the quarter was $97 million, compared to $53 million in the same quarter of 2022, reflecting an increase of 83%[31]. Store Expansion - The company added 1,697 new stores in 2023, bringing the total store count to 14,644, covering over 2,000 towns[2]. - KFC opened a record 1,202 new stores in 2023, bringing the total to 10,296 stores[9]. - The company plans to add approximately 1,500 to 1,700 new stores in 2024[13]. - The total number of stores is expected to reach 20,000 by 2026[13]. Profit Margins - The restaurant profit margin expanded to 16.3%, with a 270 basis point increase when excluding non-comparable items[3]. - KFC's restaurant profit margin for 2023 was 17.7%, an increase of 240 basis points from the previous year[9]. - Pizza Hut's restaurant profit margin for 2023 was 11.8%, an increase of 330 basis points from the previous year[12]. - The restaurant profit margin for KFC was 12.0%, while Pizza Hut's was 7.3% for the quarter ended December 31, 2023[36]. Digital and Membership Growth - Digital order revenue exceeded $9.2 billion, accounting for approximately 89% of restaurant revenue[3]. - The total number of KFC and Pizza Hut members reached over 470 million, a 14% increase year-over-year, with member sales contributing 65% to system sales[3]. Shareholder Returns - Yum China plans to increase its cash dividend by 23% to $0.16 per share, payable on March 26, 2024[5]. - The company announced a stock repurchase program of $1.25 billion for 2024, including $750 million in the U.S. and $500 million in Hong Kong[5]. - The company aims to return at least $3 billion to shareholders through quarterly cash dividends and stock buybacks[13]. Future Outlook - The company aims to serve half of China's population by 2026, currently serving one-third[7]. - System sales and operating profit are anticipated to achieve high single-digit to double-digit annual compound growth, with earnings per share expected to grow at a double-digit annual compound rate from 2023[13]. - The company plans to continue expanding its market presence and investing in new product development[19]. - New product development initiatives are underway to improve customer engagement and drive sales growth[44]. - The company is exploring potential acquisitions to strengthen its market position and diversify its portfolio[44]. Employee and Operational Insights - The company reported a significant increase in employee benefits expenses, which rose to $2,725 million, up 14% from $2,389 million in 2022[19]. - The management emphasized the importance of cost control measures to improve profitability in the future[44]. Recognition and Sustainability - Yum China ranked first in the global restaurant and leisure facilities industry in the 2023 S&P Global Corporate Sustainability Assessment[13]. - The company has been recognized as a "Top Employer in China" for six consecutive years, leading the restaurant industry[13]. - Yum China was listed as the fifth most admired company in the global food service industry by Fortune magazine in 2024[13].

Core Insights - Yum China reported a strong performance in 2023, with total revenues reaching $11 billion and adjusted operating profit of $1.1 billion, marking significant growth compared to the previous year [1][3][5]. Fourth Quarter Highlights - Total system sales increased by 21% year-over-year, driven by a 12% contribution from net new units and a 4% growth in same-store sales [2][6]. - The company opened 542 net new stores in Q4, bringing the total store count to 14,644, with KFC at 10,296 stores and Pizza Hut at 3,312 stores [2][3]. - Total revenues for Q4 rose by 19% to $2.49 billion, while operating profit surged by 170% to $110 million [2][6]. - Core operating profit grew by 324%, and diluted EPS increased by 77% to $0.23 [2][6]. Full Year Highlights - For the full year, total system sales grew by 21%, with a 9% contribution from net new units and a 7% increase in same-store sales [3][6]. - Total revenues increased by 15% to $10.98 billion, and operating profit grew by 76% to $1.1 billion [3][6]. - Digital sales exceeded $9.2 billion, accounting for approximately 89% of total company sales, with total membership for KFC and Pizza Hut exceeding 470 million [3][5]. Shareholder Returns - Yum China returned approximately $833 million to shareholders in 2023 through share repurchases and cash dividends, marking the highest full-year return in the company's history [5][6]. - The board declared a 23% increase in cash dividends to $0.16 per share, payable on March 26, 2024 [5][6]. Strategic Outlook - The company plans to open approximately 1,500 to 1,700 net new stores in 2024 and aims to reach a total store count of 20,000 by 2026 [10][11]. - Yum China targets a high-single-to-double-digit CAGR for system sales and operating profit from 2024 to 2026, using 2023 as the base year [10][11]. Operational Performance - KFC's system sales grew by 20% for both the quarter and the year, with a record 1,202 net new stores opened in 2023 [8][9]. - Pizza Hut's system sales increased by 24% for the quarter and 20% for the year, with a record 409 net new stores opened [9][10]. Recognition and Sustainability - Yum China was ranked number one globally in the Restaurant & Leisure Facilities Industry in the S&P Global 2023 Corporate Sustainability Assessment [11]. - The company has been recognized as a Top Employer in China for six consecutive years and was included in the Fortune World's Most Admired Companies list for 2024 [11].

Yum China Holdings, Inc. (YUMC) is scheduled to report fourth-quarter 2023 results on Feb 6, after market close. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 10.6% and 3.6%, respectively.How are Estimates Placed?The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 13 cents, flat year over year. In the past 30 days, earnings estimates have witnessed an upward revision of 8.3%. For revenues, the consensus mark is pegged at ...

SHANGHAI, Jan. 25, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced, in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "HKEX") which require advance notice of board meetings at which a dividend is expected to be declared, that its board of directors (the "Board") will consider the declaration and payment of a quarterly dividend (the "Dividend"). If the Board decides to procee ...

Core Insights - Yum China Holdings, Inc. has been recognized as a Top Employer China for the sixth consecutive year, ranking fourth overall among more than 150 companies and first in the restaurant industry, reflecting its commitment to employee welfare and development [1][2] Group 1: Employee Commitment and Recognition - The recognition as a Top Employer highlights Yum China's performance in People Strategy, Digital HR, Working Environment, and Career Development, showcasing its "People First" philosophy [1] - CEO Joey Wat emphasized the importance of the "Fair, Care, and Pride" principle in fostering a vibrant and inclusive culture that supports employee growth [1] - The company has over 400,000 employees, with female representation exceeding 50% of the total workforce by the end of 2023, demonstrating its commitment to diversity and inclusion [1] Group 2: Talent Development and Training - Yum China offers a suite of learning and development programs, including structured career advancement opportunities and specialized training for various roles [2] - The "Yum China Bytes & Bites Program" was launched in 2023 to provide working opportunities for approximately 80 students from leading Chinese universities, integrating technology with practical experience [2] - The "Angel Restaurants" initiative supports employees with special needs, with KFC China operating 46 such restaurants employing over 200 individuals by June 2023 [2] Group 3: Technological Innovation - The company is a pioneer in digital transformation, utilizing AI for demand forecasting, inventory management, crew scheduling, and production, which enhances operational efficiency and promotes sustainable growth [3] Group 4: Company Overview - Yum China is the largest restaurant company in China, operating over 14,000 restaurants across 1,900 cities under six brands, including KFC and Pizza Hut [5] - The company has a strong digitalized supply chain and logistics network, enabling it to serve customers effectively and efficiently [5] - As a Fortune 500 company, Yum China aims to be the world's most innovative pioneer in the restaurant industry [5]

Yum China Holdings, Inc. (YUMC) is likely to benefit from menu innovation efforts, marketing campaigns and digital initiatives. Also, the focus on unit expansion efforts bodes well. However, uncertain macroeconomic conditions and wage inflation are a concern.Let us discuss the factors highlighting why investors should retain the stock for now.CatalystsYUM China's strategy for capturing sales growth revolves around providing good food and exceptional value. Noteworthy food innovations, such as the Juicy Whol ...

SHANGHAI, Dec. 21, 2023 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China", NYSE: YUMC and HKEX: 9987) today announced that the Company has been ranked number one globally for the Restaurant & Leisure Facilities Industry in the S&P Global 2023 Corporate Sustainability Assessment (CSA). For the fourth consecutive year, Yum China has been selected as a member of both the Dow Jones Sustainability Indices (DJSI): World Index (DJSI World) and Emerging Market Index (DJSI Emerging Markets). It ...

Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including income, comprehensive income, cash flows, balance sheets, and equity, with detailed notes [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 & YTD 2023 Financial Performance Highlights (in US$ millions, except per share data) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,914 | $2,685 | $8,485 | $7,481 | | **Operating Profit** | $323 | $316 | $996 | $588 | | **Net Income (Yum China)** | $244 | $206 | $730 | $389 | | **Diluted EPS** | $0.58 | $0.49 | $1.73 | $0.92 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Income (Loss) (in US$ millions) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $267 | $227 | $794 | $420 | | **Foreign currency translation adjustments** | $(29) | $(306) | $(274) | $(573) | | **Comprehensive Income (Loss) (Yum China)** | $218 | $(56) | $491 | $(101) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Year-to-Date Cash Flow Summary (in US$ millions) | Cash Flow Activity | YTD Ended 9/30/2023 | YTD Ended 9/30/2022 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $1,334 | $1,329 | | **Net Cash Used in Investing Activities** | $(1,052) | $(593) | | **Net Cash Used in Financing Activities** | $(240) | $(583) | | **Cash, Cash Equivalents, and Restricted Cash - End of Period** | $1,131 | $1,211 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in US$ millions) | Account | 9/30/2023 (Unaudited) | 12/31/2022 | | :--- | :--- | :--- | | **Total Current Assets** | $3,923 | $3,940 | | **Total Assets** | $12,070 | $11,826 | | **Total Current Liabilities** | $2,472 | $2,166 | | **Total Liabilities** | $4,811 | $4,666 | | **Total Equity** | $7,246 | $7,148 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates KFC, Pizza Hut, and other brands in China under a 50-year master license agreement with YUM! Brands, paying a **3% license fee** on net system sales[25](index=25&type=chunk) - As of September 30, 2023, the company operated over **9,900 KFC stores** and over **3,200 Pizza Hut restaurants** in China[26](index=26&type=chunk) - The company's two reportable segments are KFC and Pizza Hut. All other brands and business units are combined into "All Other Segments"[29](index=29&type=chunk) - The company is under a national audit on transfer pricing by the Chinese State Taxation Administration (STA) regarding related party transactions from 2006 to 2015. The potential impact cannot be reasonably estimated but could be material[113](index=113&type=chunk) - Subsequent to the quarter end, the Board of Directors declared a cash dividend of **$0.13 per share** and increased the share repurchase authorization by **$1 billion** to an aggregate of **$3.4 billion**[124](index=124&type=chunk)[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition and results, covering consolidated and segment performance, liquidity, capital resources, and significant trends including post-COVID recovery and tax matters [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section details the company's financial performance, analyzing consolidated results, segment-specific sales, restaurant profit, operating profit, and corporate unallocated items Q3 2023 Performance Summary (% Change vs Q3 2022, Ex-F/X) | Segment | System Sales | Same-Store Sales | Operating Profit | | :--- | :--- | :--- | :--- | | **KFC** | +15% | +4% | +10% | | **Pizza Hut** | +13% | +2% | +1% | | **Total** | +15% | +4% | +9% | YTD 2023 Performance Summary (% Change vs YTD 2022, Ex-F/X) | Segment | System Sales | Same-Store Sales | Operating Profit | | :--- | :--- | :--- | :--- | | **KFC** | +21% | +9% | +63% | | **Pizza Hut** | +19% | +7% | +60% | | **Total** | +20% | +8% | +79% | - YTD Operating Profit growth (Ex-F/X) was driven by increased sales, favorable commodity prices, and increased VAT deductions, partially offset by increased value promotions, wage inflation, and lower temporary relief[140](index=140&type=chunk) - KFC's YTD Restaurant Profit (Ex-F/X) increased primarily due to higher sales, increased VAT deductions, and favorable commodity prices[170](index=170&type=chunk) - Pizza Hut's YTD Restaurant Profit (Ex-F/X) increased due to higher sales, favorable commodity prices, and increased VAT deductions[180](index=180&type=chunk) [Significant Known Events, Trends or Uncertainties](index=50&type=section&id=Significant%20Known%20Events%2C%20Trends%20or%20Uncertainties) This section outlines key external and internal factors influencing future results, including post-pandemic recovery, softening consumer demand, tax examinations, and VAT policy uncertainties - The company observed softening consumer demand in late September through October 2023, and expects the post-pandemic economic recovery to be a "wave-like" and "non-linear" process[194](index=194&type=chunk)[195](index=195&type=chunk) - The company is under a national audit on transfer pricing by the Chinese State Taxation Administration (STA) for the period 2006-2015, with a focus on the franchise arrangement with YUM. The potential impact is not yet estimable but could be material[196](index=196&type=chunk) - A preferential VAT policy allowing additional input VAT deductions was extended to December 31, 2023, but at a reduced rate. It is uncertain if this policy will continue upon expiration[202](index=202&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's financial position, funding sources, and capital allocation strategy, including store expansion, technology investments, shareholder returns, and borrowing capacity - Fiscal year 2023 capital expenditures are expected to be in the range of **$700 million to $900 million**[208](index=208&type=chunk) - During the nine months ended September 30, 2023, the company repurchased **4.9 million shares** for **$281 million** and paid cash dividends of approximately **$162 million**[210](index=210&type=chunk)[211](index=211&type=chunk) - As of September 30, 2023, the company had approximately **$535 million** in unused credit facilities[215](index=215&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, including foreign currency exchange rate fluctuations, commodity price volatility, and investment risk from equity holdings - The company is exposed to foreign currency risk as substantially all assets are in China. A hypothetical **10% weakening of the RMB** against the US$ would have decreased Q3 2023 Operating Profit by approximately **$31 million**[223](index=223&type=chunk) - The company faces investment risk from its equity investment in Meituan, which is recorded at fair value and is subject to market price volatility[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[227](index=227&type=chunk) - There were no material changes to the company's internal control over financial reporting during the third quarter of 2023[228](index=228&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various lawsuits but believes ultimate liability will not materially adversely affect its financial condition or results - The company believes that the ultimate liability from various lawsuits is not likely to have a material adverse effect on its financial results, condition, or cash flows[123](index=123&type=chunk)[230](index=230&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) No material changes from risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[231](index=231&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activity during Q3 2023, including shares repurchased and average price paid under its program Share Repurchases in Q3 2023 | Period | Total Shares Repurchased (thousands) | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | July 2023 | 352 | $58.32 | | August 2023 | 2,001 | $54.43 | | September 2023 | 514 | $54.91 | | **Total Q3** | **2,867** | **$54.91** | - As of September 30, 2023, approximately **$870 million** remained available for future share repurchases under the authorized program[233](index=233&type=chunk)

Yum China Holdings, Inc. (NYSE:YUMC) Q3 2023 Earnings Conference Call October 31, 2023 8:00 PM ET Company Participants Joey Wat - Chief Executive Officer Andy Yeung - Chief Financial Officer Michelle Shen - Director of Investor Relations Conference Call Participants Michelle Cheng - Goldman Sachs Lin Sijie - CICC Christine Peng - UBS Chen Luo - Bank of America Lillian Lou - Morgan Stanley Anne Ling - Jefferies Ethan Wang - CLSA Xiaopo Wei - Citi Operator Thank you for standing by, and welcome to the Yum Chi ...