Third Quarter 2023 Results 1 November 2023 NYSE: YUMC and HKEX: 9987 Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures Thispresentation contains“forward-lookingstatements” withinthemeaningof Section 27Aof the SecuritiesAct of 1933and Section 21E ofthe SecuritiesExchangeActof1934.Weintendallforward-lookingstatementstobecovered bythesafe harbor provisionsofthePrivateSecurities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do no ...

Financial Performance - Total revenue for Q3 2023 was $2.91 billion, an increase of 9% year-over-year, or 15% when adjusted for fixed exchange rates[3]. - Operating profit reached $323 million, a 2% increase from $316 million in the same quarter last year, or a 9% increase when adjusted for fixed exchange rates[5]. - Net profit for Q3 2023 was $244 million, an 18% increase compared to $206 million in the same quarter last year[5]. - Adjusted operating profit reached a record high of $327 million, up 3% from $318 million in the same quarter last year[5]. - Adjusted net profit was $248 million, a 19% increase from $208 million in the same quarter last year[5]. - Basic earnings per share for Q3 2023 was $0.59, compared to $0.49 in Q3 2022, a 20.4% increase[29]. - The effective tax rate improved to 27.5% from 29.9% in the previous year, a decrease of 2.4 percentage points[22]. - The actual tax rate for Q3 2023 was 27.5%, down from 29.9% in Q3 2022, showing a reduction of 8.0%[29]. - The adjusted actual tax rate for the nine months ended September 30, 2023, was 27.0%, compared to 29.9% in the same period of 2022, reflecting a decrease of 9.7%[29]. Sales and Store Growth - System sales increased by 15% year-over-year, with KFC and Pizza Hut growing by 15% and 13% respectively, driven by new store contributions and same-store sales growth[3]. - The company added a net of 500 new stores in Q3 2023, bringing the total number of stores to 14,102 as of September 30, 2023[3]. - The company opened a net of 500 new stores in Q3 2023, bringing the total net new stores for the first three quarters to 1,155, on track to meet the annual target of 1,400 to 1,600 new stores[6][10]. - As of September 30, 2023, KFC had a total of 8,915 self-operated restaurants, an increase of 868 from the previous year, while Pizza Hut had 3,047 self-operated restaurants, up by 366[32]. - The company opened 999 new restaurants across all brands, while closing 176, resulting in a net increase of 823 restaurants[32]. Profit Margins - The restaurant profit margin was 17.0%, down from 18.8% in the same quarter last year, primarily due to previous cost control measures[3]. - The restaurant profit margin for Q3 2023 was 17.0%, down from 18.8% in the same period last year, primarily due to increased promotional costs and rising wage costs[12][13]. - KFC's restaurant profit margin decreased to 18.6% from 20.6% year-over-year[23]. - Pizza Hut's restaurant profit margin was 12.7%, down from 13.4% in the same quarter of 2022[24]. - The restaurant profit margin for KFC was 19.4%, while Pizza Hut's was 13.1%, leading to an overall restaurant profit margin of 17.9%[40]. Digital and Membership Initiatives - The membership program reached over 460 million members, with member sales accounting for approximately 65% of system sales in Q3 2023[8][9]. - Digital orders, including takeout and mobile orders, represented about 89% of restaurant revenue in Q3 2023[8][9]. - Takeout sales accounted for approximately 35% of restaurant revenue in Q3 2023, a decrease of three percentage points from the previous year[8][9]. - The company has a strong digital capability and membership program to enhance customer engagement and service[21]. Future Outlook and Strategic Plans - The company aims to reach 20,000 stores by 2026 and expects high single to double-digit annual compound growth in system sales and operating profit from 2024 to 2026[15][14]. - Future outlook includes expectations for growth driven by marketing activities and product innovations, although specific numerical forecasts are not guaranteed[20]. - The company plans to maintain capital expenditures between $700 million and $900 million for 2023[14]. - The company plans to return $6 billion to $8 billion to shareholders through dividends and share repurchases over the year, having already returned $211 million in Q3 2023[7][6]. Costs and Expenses - Total costs and expenses for the quarter were $2,591 million, an increase of 9% compared to $2,369 million in the same quarter of 2022[22]. - The company incurred total costs and expenses of $2,591 million, leading to a net operating loss of $59 million[35]. - KFC's total costs and expenses for the quarter were $1,844 million, an increase of 9% from $1,689 million in the same quarter of 2022[23]. - Pizza Hut's total costs and expenses for the quarter were $552 million, an increase of 8% from $512 million in the same quarter of 2022[24]. Cash Flow and Assets - The company reported a significant increase in cash generated from operating activities, totaling $1,334 million for the nine months ended September 30, 2023, compared to $1,329 million in the same period of 2022[26]. - Total assets as of September 30, 2023, amounted to $12,070 million, compared to $11,826 million as of December 31, 2022, reflecting a growth of about 2%[25]. - Cash and cash equivalents at the end of the period were $1,131 million, slightly up from $1,130 million at the end of 2022[26]. - The total liabilities increased to $4,811 million as of September 30, 2023, from $4,666 million at the end of 2022, marking an increase of approximately 3%[25]. - The company’s total equity increased to $7,246 million as of September 30, 2023, from $7,148 million at the end of 2022, reflecting a growth of approximately 1.4%[25]. Investor Relations and Communication - The upcoming earnings conference call is scheduled for October 31, 2023, at 8 PM ET, with a replay available until November 8, 2023[18]. - Investors can access important information through the company's investor relations website[19]. - The company emphasizes the importance of non-GAAP financial measures, excluding special items from reported GAAP results[16]. - The company believes that presenting adjusted metrics provides investors with additional information for comparing past and current performance[35]. - The company emphasizes that adjusted metrics are not intended to replace financial performance presented in accordance with U.S. GAAP[35].

Company Overview - As of June 30, 2023, Yum China operates over 13,000 restaurants across more than 1,900 cities in China, making it the largest restaurant company in the country by system sales[10]. - KFC is the leading fast-food brand in China, with over 9,500 restaurants in more than 1,900 cities as of June 30, 2023[10]. - Pizza Hut is the largest casual dining brand in China, operating over 3,000 restaurants in more than 650 cities as of June 30, 2023[10]. - The company has established a joint venture with Lavazza Group to explore and develop the Lavazza coffee brand concept in China[10]. - The company has accumulated over 35 years of operational experience in the Chinese market since KFC's entry in 1987[10]. Financial Performance - Total revenue for the company reached $5,571 million, a 16% increase compared to $4,796 million in the same period of 2022[16]. - The net profit attributable to Yum China Holdings, Inc. was $486 million, representing a 166% increase from $183 million in the same period of 2022[16]. - Operating profit for the six months ended June 30, 2023, was $673 million, a significant increase from $272 million in the same period of 2022[16]. - The company's restaurant profit margin improved to 18.3%, up from 13.0% in the previous year, reflecting a 5.3 percentage point increase[16]. - System sales increased by 24% for KFC and 23% for Pizza Hut, with same-store sales growth of 11% and 10% respectively for the six months ended June 30, 2023[14]. Expansion Plans - The company believes there are significant expansion opportunities within existing and new cities in China[10]. - The company plans to open approximately 1,100 to 1,300 new stores in fiscal year 2023[18]. - Capital expenditures are projected to be between $700 million and $900 million for the fiscal year 2023[18]. Tax and Regulatory Matters - The company continues to defend its transfer pricing arrangements amid ongoing tax audits by Chinese and U.S. tax authorities, with potential significant impacts on financial condition and cash flow if additional taxes are assessed[51]. - The actual tax rate for the company was 27.0%, down from 30.4% in the previous year[21]. - The company anticipates continued macroeconomic uncertainty, with potential wage increases and the gradual removal of VAT offset policies, prompting a cautious approach to growth opportunities and risk management[49]. Shareholder Information - The company declared a cash dividend of $0.26 per ordinary share, totaling $108 million[132]. - The company repurchased 2.1 million shares for $124 million and 9.0 million shares for $400 million in the first half of 2023[59]. - As of June 30, 2023, the total number of issued shares is 267,052,046, with 屈翠容 holding 1,000,000 shares, representing 0.37% ownership[82]. Employee and Compensation - The company employs over 430,000 employees, with approximately 90% being restaurant staff, and about 72% of restaurant employees working part-time[71]. - Non-employee directors receive an annual retention fee of $315,000, payable in common stock or up to half in cash[93]. - The total stock awards granted to non-employee directors during the reporting period amounted to $2,362,500, with a total of 40,253 shares issued[95]. Market and Economic Conditions - Significant sales recovery was observed in the first half of 2023, attributed to the easing of COVID-19 restrictions in China, leading to strong growth in restaurant revenue driven by same-store sales increases and improved profit margins[49]. - The company expects to see significant progress in tax audits within the next 12 months, including expert reviews by the State Taxation Administration[50]. - The company continues to monitor regulatory developments regarding the new Corporate Alternative Minimum Tax (CAMT) and its potential impact on financial statements[183]. Investment and Acquisitions - The company completed the acquisition of 28% equity in Hangzhou Beverage for $255 million, gaining control of Hangzhou KFC with approximately 60% ownership[141]. - The company acquired an additional 25% equity in Suzhou KFC for $149 million, increasing its ownership to 72% and gaining control of Suzhou KFC[142]. - The company has recognized VAT offsets of $19 million and $9 million in Q1 and Q2 of 2023, respectively, as reductions in related expense items[54]. Risk Management - The company has a significant foreign currency exchange risk due to most of its assets being located in China[74]. - The company manages commodity price risks through pricing agreements with suppliers[75]. - If the RMB depreciates by 10% against the USD, the company's operating profit would decrease by approximately $64 million[74].

Financial Performance - Total revenue for the six months ended June 30, 2023, was $5.57 billion, an increase of 16% from $4.80 billion in the same period last year[1]. - Operating profit reached $673 million, a 147% increase from $272 million in the same period last year, driven by higher sales and improved profit margins[1]. - Net profit was $486 million, up 166% from $183 million year-over-year, primarily due to the increase in operating profit[2]. - Diluted earnings per share were $1.15, a 167% increase from $0.43 in the same period last year[2]. - Comprehensive income for the six months ended June 30, 2023, was $273 million, compared to a loss of $45 million in the same period last year[7]. - Cash generated from operating activities reached $924 million, up from $609 million year-over-year, indicating a 52% increase[8]. - Net profit for the six months ended June 30, 2023, was $527 million, a significant increase from $193 million in the same period of 2022, representing a growth of 173%[8]. - The company reported a net cash outflow from investing activities of $598 million, compared to $52 million in the previous year, highlighting increased investment activity[8]. - The company reported a decrease in net other expenses to $1 million for the six months ended June 30, 2023, compared to $49 million in the same period of 2022[37]. - The company reported a significant increase in user data, with active users growing by 10% year-over-year[70]. Revenue Breakdown - System sales increased by 24% year-over-year, with KFC and Pizza Hut growing by 24% and 23% respectively, excluding foreign currency effects[1]. - Same-store sales rose by 11% compared to the previous year, with KFC and Pizza Hut increasing by 11% and 10% respectively, excluding foreign currency effects[1]. - The company restaurant revenue was $5.29 billion, compared to $4.57 billion in the previous year[6]. - Revenue from company restaurants totaled $4,574 million, with KFC contributing $3,562 million and Pizza Hut $985 million for the six months ended June 30, 2023[27]. - Franchise fee revenue amounted to $46 million, with KFC generating $32 million and Pizza Hut $4 million during the same period[27]. - Revenue from transactions with franchise stores reached $182 million, with KFC at $21 million and Pizza Hut at $2 million[27]. - Other income was reported at $343 million, including $306 million from logistics and warehousing services[27]. Assets and Liabilities - Total assets as of June 30, 2023, amounted to $11,675 million, a slight decrease from $11,826 million at the end of 2022[9]. - Total liabilities decreased to $4,458 million from $4,666 million, showing a reduction of 4.5%[9]. - Shareholders' equity increased to $7,205 million from $7,148 million, indicating a growth of 0.8%[9]. - The company’s investment in equity accounted investees was $257 million as of June 30, 2023, down from $266 million as of December 31, 2022[40]. - The total fixed assets as of June 30, 2023, amounted to $4,493 million, a slight decrease from $4,586 million as of December 31, 2022[40]. - The goodwill balance as of June 30, 2023, is $2,282 million, down from $2,379 million as of December 31, 2022, reflecting a decrease of 4.1%[43]. Investments and Acquisitions - The company completed the acquisition of a 28% stake in Hangzhou Beverage for $255 million, gaining control of approximately 60% of Hangzhou KFC[16]. - The company has consolidated the financial performance of Hangzhou KFC since the acquisition date, reflecting its operational results in the financial statements[16]. - The company completed the acquisition of an additional 25% stake in Suzhou KFC for $149 million, increasing its ownership to 72% in Q3 2020[17]. - In December 2022, the company acquired an additional 20% stake in Suzhou KFC for $115 million, raising total ownership to 92%[17]. - The company has expanded its business by acquiring a controlling stake in a food delivery service provider, enhancing its delivery operations[12]. Shareholder Returns - The company repurchased $122 million in common stock during the period, down from $400 million in the previous year[8]. - The company paid cash dividends of $108 million on common stock, slightly up from $101 million in the same period last year[8]. - On July 31, 2023, the company announced a cash dividend of $0.13 per share, totaling approximately $54 million to be paid on September 18, 2023[65]. Operational Highlights - As of June 30, 2023, Yum China operates over 9,500 KFC stores in China, holding controlling interests of 58% to 92% in various regions[11]. - The company has over 3,000 Pizza Hut restaurants in China as of June 30, 2023[12]. - The number of self-operated restaurants increased by 12% to 11,747 as of June 30, 2023, compared to 10,461 in 2022[84]. - The company aims to open approximately 1,100 to 1,300 new stores in fiscal year 2023[84]. - The company has a membership program allowing registered members to earn points redeemable for products, with points typically expiring after 18 months[26]. Tax and Regulatory Matters - The actual tax rate for the six months ended June 30, 2023, was 27.0%, a decrease from 30.4% in the prior year, attributed to improved performance of several subsidiaries[57]. - The company continues to monitor regulatory developments related to the Corporate Alternative Minimum Tax (CAMT) and its potential impact on financial statements[57]. - The company is currently undergoing a transfer pricing audit by the Chinese tax authorities, which may lead to significant developments in the next 12 months[58]. - The company believes that any potential tax liabilities arising from the indirect transfer of assets in China may be significant due to a small tax base[63]. Future Outlook - The company plans to gradually phase out the COFFii & JOY brand and has already closed all related stores by March 2022[12]. - The company expects capital expenditures for the fiscal year 2023 to be between approximately $700 million and $900 million[116]. - The company anticipates continued uncertainty in the macroeconomic environment, with potential wage increases and gradual removal of VAT rebate policies impacting future performance[110]. - The company plans to use future cash primarily for operations and capital expenditures related to accelerating store network expansion and renovations, as well as increasing investments in digitalization, automation, and logistics infrastructure[115].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _________________ Commission file number 001-37762 Yum China Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 81 ...

Yum China Holdings, Inc. (NYSE:YUMC) Q2 2023 Earnings Conference Call July 31, 2023 8:00 PM ET Company Participants Michelle Shen - Director of Investor Relations Joey Wat - Chief Executive Officer Andy Yeung - Chief Financial Officer Conference Call Participants Michelle Cheng - Goldman Sachs Group, Inc. Brian Bittner - Oppenheimer & Co. Chen Luo - Bank of America Merrill Lynch Anne Ling - Jefferies Sijie Lin - CICC Lillian Lou - Morgan Stanley Christine Peng - UBS Operator Thank you for standing by, and w ...

Yum China Holdings, Inc. (NYSE:YUMC) Q2 2023 Earnings Conference Call July 31, 2023 8:00 PM ET Company Participants Michelle Shen - Director of Investor Relations Joey Wat - Chief Executive Officer Andy Yeung - Chief Financial Officer Conference Call Participants Michelle Cheng - Goldman Sachs Group, Inc. Brian Bittner - Oppenheimer & Co. Chen Luo - Bank of America Merrill Lynch Anne Ling - Jefferies Sijie Lin - CICC Lillian Lou - Morgan Stanley Christine Peng - UBS Operator Thank you for standing by, and w ...

Second Quarter 2023 Results 1 August 2023 NYSE: YUMC and HKEX: 9987 Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures Thispresentation contains“forward-lookingstatements” withinthemeaningof Section 27Aof the SecuritiesAct of 1933and Section 21E ofthe SecuritiesExchangeActof1934.Weintendallforward-lookingstatementstobecovered bythesafe harbor provisionsofthePrivateSecurities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not ...

Financial Performance - Total revenue for Q2 2023 reached $2.65 billion, a 25% increase from $2.13 billion in the same period last year[3]. - Net profit for Q2 2023 was $197 million, a 138% increase from $83 million in the same period last year[3]. - Adjusted net profit for Q2 2023 was $199 million, a 137% increase from $84 million in the same period last year[6]. - Total revenue for the six months ended June 30, 2023, was $5,289 million, a 16% increase from $4,574 million in the same period of 2022[21]. - Net profit for the six months ended June 30, 2023, was $486 million, compared to $197 million in the same period of 2022, representing a significant increase[21]. - Net profit for Yum China Holdings, Inc. was $197 million for the quarter ended June 30, 2023, compared to $83 million for the same quarter in 2022, representing a significant increase[29]. - The company reported a net income of $673 million, indicating strong financial performance[38]. Sales and Revenue Growth - System sales increased by 32% year-over-year, with KFC and Pizza Hut growing by 32% and 30% respectively, excluding foreign exchange impacts[3]. - Same-store sales rose by 15%, with KFC and Pizza Hut increasing by 15% and 13% respectively, excluding foreign exchange impacts[3]. - Company restaurant revenue reached $2,517 million for the quarter, up 24% from $2,026 million year-over-year[21]. - KFC's revenue for the six months ended June 30, 2023, was $1,954 million, a 24% increase from $1,571 million in the same period of 2022[22]. - Pizza Hut's revenue for the six months ended June 30, 2023, was $1,137 million, a 15% increase from $985 million in the same period of 2022[23]. - KFC's total income for the six months ended June 30, 2023, was $1,984 million, a 24% increase from $1,594 million in the same period of 2022[22]. - Pizza Hut's total income for the six months ended June 30, 2023, was $1,151 million, a 16% increase from $995 million in the same period of 2022[23]. Profitability Metrics - Operating profit was $257 million, up 216% from $81 million in Q2 2022, primarily driven by higher same-store sales and improved profit margins[3]. - Adjusted operating profit for Q2 2023 was $259 million, a 215% increase from $82 million in Q2 2022[6]. - The restaurant profit margin improved to 16.1%, compared to 12.1% in the same period last year[3]. - Operating profit margin improved to 10.2% for the quarter, compared to 4.0% in the same quarter last year, reflecting a 6.2 percentage point increase[21]. - KFC's restaurant profit margin improved to 17.3% for the six months ended June 30, 2023, compared to 13.4% in the same period of 2022[22]. - Pizza Hut's restaurant profit margin was 12.4% for the six months ended June 30, 2023, compared to 8.6% in the same period of 2022, showing improved efficiency[23]. Store Expansion - The company added a net of 422 new stores in Q2 2023, bringing the total number of stores to 13,602 as of June 30, 2023[3]. - The company opened a net total of 655 new stores in the first half of 2023, with KFC exceeding 1,900 towns and Pizza Hut surpassing 3,000 stores in China[7][11]. - The company has a target of opening approximately 1,100 to 1,300 new stores for the fiscal year 2023[15]. - Total restaurant count increased to 9,562 as of June 30, 2023, with KFC operating 8,612 restaurants and Pizza Hut operating 3,072 restaurants[31][32]. Digital and Membership Growth - As of June 30, 2023, the total membership for KFC and Pizza Hut reached over 445 million, with membership sales accounting for approximately 66% of system sales[9][10]. - Digital orders, including takeout, mobile orders, and self-service kiosk orders, accounted for about 90% of restaurant revenue in Q2 2023[9][10]. Cost Management and Financial Health - Total costs and expenses for the six months ended June 30, 2023, were $4,898 million, an 8% increase from $4,524 million in the same period of 2022[21]. - The company reported a decrease in inventory net amount to $396 million from $417 million, a decline of 5.0%[24]. - The company repurchased approximately 1 million shares for a total of $62 million at an average price of $60.23 per share in Q2 2023[8]. - The company repurchased common stock amounting to $122 million, compared to $400 million in the same period of 2022, indicating a reduction in buyback activity[25]. Strategic Initiatives and Future Plans - The company plans to continue expanding its store network while maintaining strict cost control measures to drive long-term sustainable growth[7][13]. - The company aims to become the world's most innovative restaurant pioneer, leveraging its strong digital capabilities and supply chain management[20]. - Future growth strategies include exploring and developing the Lavazza coffee concept in China[20]. - The company plans to focus on expanding its market presence and enhancing its product offerings in the upcoming quarters[42]. - The company is exploring potential acquisitions to enhance its market position and diversify its offerings[38].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _________________ Commission file number 001-37762 Yum China Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 8 ...