Certain metrics fell in the latest quarter, but the company is promising some good things for the year.Shares of restaurant company Yum China (YUMC -6.42%) -- parent company of KFC, Pizza Hut, and more in China -- dropped on Tuesday after it reported financial results for the first quarter of 2024. The company grew sales by opening new restaurants, but sales at existing restaurants fell, which was not something investors cared for. As of 10 a.m. ET, Yum China stock was down 6%, but it had been down 10% earl ...

Financial Data and Key Metrics Changes - System sales grew 6% year-over-year, following a 17% growth last year [6][22] - Revenue reached an all-time high of US$3 billion in the quarter [6] - Core operating profit improved to US$396 million from US$392 million last year [6][22] - Adjusted operating profit was the second highest in 30 quarters since the spin-off [6] - Diluted EPS grew 10% year-over-year to $0.71 [27] Business Line Data and Key Metrics Changes - KFC system sales increased 7% year-over-year, with 307 net new stores added [23] - KFC same-store sales were at 98% of prior year levels, with 4% same-store traffic growth [23] - Pizza Hut system sales increased 4% year-over-year, with 113 net new stores added [24] - Pizza Hut same-store sales were at 95% of prior year levels, driven by strong traffic growth of 8% [24] Market Data and Key Metrics Changes - Two-thirds of new store openings were in smaller store formats [9] - KFC's delivery sales grew by 14%, maintaining consistent growth over the past decade [36] - Sales at shopping malls surpassed 2019 levels, indicating robust trading [35] Company Strategy and Development Direction - The company aims to open 1,500 to 1,700 net new stores in 2024, focusing on strategic locations [29] - The flexible store models and franchise partnerships are key to capitalizing on opportunities in lower-tier cities [9] - The company is committed to enhancing operational efficiency through initiatives like Project Fresh Eye [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that competition remains intense but is viewed positively as it drives industry growth [50] - The company anticipates a challenging second quarter due to high base comparisons from last year [28] - Management emphasized the importance of adapting to consumer behavior and maintaining a balanced approach to pricing and product offerings [34][39] Other Important Information - The company returned a record US$745 million to shareholders in the first quarter through share repurchases and dividends [29] - The effective tax rate was 26.9% in the first quarter, lower than the previous year due to fewer non-tax deductible expenses [27] Q&A Session Summary Question: Insights on same-store sales and consumption trends - Management highlighted robust transaction growth during the Chinese New Year and noted that consumers are responding well to both high-ticket and lower-ticket items [33][34] Question: Traffic growth sources - Management indicated that traffic growth is coming from both new customers and increased frequency from existing customers, with a focus on value for money [41][42] Question: Competitive environment and promotional intensity - Management acknowledged that competition has intensified but emphasized the importance of evolving with competitors and maintaining a consistent strategy [50][51] Question: Cost of goods sold and food cost outlook - Management noted that food costs have increased due to promotional activities but expect favorable commodity prices to help manage costs moving forward [60][61] Question: Delivery services resilience post-COVID - Management confirmed that delivery sales have remained strong and are focusing on smaller order sizes to enhance growth in this segment [66]

First Quarter 2024 Results 30 April 2024 NYSE: YUMC and HKEX: 9987 Cautionary Statement Thispresentationcontains“forward-lookingstatements”withinthemeaningofSection27AoftheSecuritiesActof1933andSection21EoftheSecurities ExchangeActof1934.Weintendallforward-lookingstatementstobecoveredbythesafeharborprovisionsofthePrivateSecuritiesLitigationReformAct of1995..Forward-lookingstatementsgenerallycanbeidentifiedbythefactthattheydonotrelatestrictlytohistoricalorcurrentfactsandbytheuseof forward-looking words such ...

For the quarter ended March 2024, Yum China Holdings (YUMC) reported revenue of $2.96 billion, up 1.4% over the same period last year. EPS came in at $0.71, compared to $0.69 in the year-ago quarter.The reported revenue represents a surprise of +0.64% over the Zacks Consensus Estimate of $2.94 billion. With the consensus EPS estimate being $0.66, the EPS surprise was +7.58%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Financial Performance - Total revenue grew by 1% to $2.96 billion; excluding foreign currency effects, revenue would have increased by 7%[3] - Operating profit reached $374 million, with a core operating profit of $396 million, reflecting a 1% increase[3] - Operating profit for the quarter reached $372 million, with core operating profit at $392 million[7] - Operating profit for Pizza Hut was $47 million, with core operating profit at $50 million[9] - Total revenue for Q1 2024 reached $2,958 million, a 1% increase from $2,917 million in Q1 2023[16] - The net profit attributable to Yum China Holdings, Inc. was $287 million, down 1% from $289 million in the previous year[16] - Basic earnings per share (EPS) for the quarter was $0.72, an increase from $0.69 in the same quarter of 2023[26] - The diluted EPS for the quarter was $0.71, up from $0.69 in the same quarter of 2023[26] - The adjusted EBITDA for the quarter was $495 million, down from $539 million in the same quarter of 2023[26] - The effective tax rate improved to 26.9%, a decrease of 1.6 percentage points from 28.5%[16] Sales and Revenue Growth - System sales increased by 6% year-over-year, driven by an 8% contribution from net new store openings[3] - Same-store sales were at 97% of last year's level, indicating strong performance despite challenges[3] - Digital sales amounted to $2.5 billion, accounting for 89% of restaurant revenue[3] - KFC and Pizza Hut membership reached 485 million, with member sales contributing 65% to system sales[3] - Takeout sales grew by 14%, accounting for approximately 39% of KFC restaurant revenue, while non-dine-in business represented about 68% of total revenue[7] - KFC restaurant revenue was $2,193 million, up 1% from $2,166 million in the same quarter last year[17] - Total revenue for the company reached $2,958 million, with KFC contributing $2,230 million and Pizza Hut contributing $595 million[30] Store Expansion - The total number of stores reached 15,022, with a net addition of 378 stores, marking a record high for the first quarter[3] - KFC added 307 net new stores this quarter, more than double the number from the same period last year, with 58 of those being franchise stores[7] - Pizza Hut added 113 net new stores this quarter, a 40% increase compared to 80 net new stores in the same period last year[9] - The company plans to add approximately 1,500 to 1,700 new stores in fiscal year 2024[10] - As of December 31, 2023, the total number of KFC restaurants increased to 10,296, with 303 new openings and 59 closures, projecting a total of 10,603 by March 31, 2024[22] - The total number of Pizza Hut restaurants reached 3,312 as of December 31, 2023, with 140 new openings and 27 closures, expected to grow to 3,425 by March 31, 2024[23] - The total number of franchised restaurants for KFC reached 1,059, with 63 new openings and 4 closures, projected to increase to 1,117 by March 31, 2024[22] Profit Margins and Costs - Operating profit margin was 12.6%, impacted by a decrease in restaurant profit margin to 17.6%[3] - Restaurant profit margin was 19.3%, a decrease of 190 basis points compared to the same period last year, primarily due to increased labor costs and the introduction of high-value products[7] - Restaurant profit margin for Pizza Hut was 12.5%, down 100 basis points year-over-year, influenced by increased labor costs and the introduction of high-value products[9] - The restaurant profit margin for KFC was 19.3%, down 2.9 percentage points from 22.2% in Q1 2023[17] - Food and packaging costs represented 32.1% of total revenue, an increase of 2.0 percentage points from 30.1%[16] - Employee benefits accounted for 25.4% of total revenue, up 0.8 percentage points from 24.6%[16] - The company's restaurant profit margin decreased to 12.5%, down from 14.2% year-over-year, a decline of 1.7 percentage points[18] Shareholder Returns - Shareholder cash return reached $745 million, setting a new record for a single quarter[3] - The company aims to return approximately $1.5 billion to shareholders through quarterly cash dividends and stock buybacks[10] Strategic Initiatives - The company plans to expand through flexible store formats and strategic partnerships to capture market opportunities[4] - The company is focusing on expanding its market presence and enhancing its product offerings through new technology and product development initiatives[36] - The company plans to continue its strategy of central procurement to optimize costs and improve profitability across its franchise operations[36] Non-GAAP Measures and Adjustments - Adjusted EBITDA is calculated by excluding special items and includes net profit, taxes, interest income, investment gains or losses, depreciation, and impairment charges[24] - Core operating profit is defined as adjusted operating profit further excluding items affecting comparability and foreign currency translation impacts, providing a clearer view of ongoing operational performance[25] - The company emphasizes that non-GAAP measures provide additional insights for investors to compare past and current performance, despite not replacing GAAP financial metrics[24]

Financial Performance - Total revenues reached $2.96 billion, a 1% increase year over year; excluding foreign currency effects, revenues would have increased by 7%[2] - Operating profit was $374 million, with core operating profit growing 1% year over year to $396 million[2] - Diluted EPS rose by 4% year over year to $0.71, or 10% excluding foreign currency effects[2] - Net income for Yum China Holdings, Inc. was $287 million, a decrease of 1% compared to $289 million in Q1 2023[20] - The effective tax rate improved to 26.9%, down from 28.5% in the previous year, reflecting a 1.6 percentage point decrease[20] - Adjusted Operating Profit for Q1 2024 is $374 million, down 11% from $419 million in Q1 2023[46] - Core Operating Profit for Q1 2024 is $396 million, a 1% increase from $392 million in Q1 2023[46] - Basic Earnings Per Common Share for Q1 2024 is $0.72, compared to $0.70 in Q1 2023[41] - Adjusted EBITDA for Q1 2024 is $495 million, down from $539 million in Q1 2023[41] Sales and Growth - Total system sales increased by 6% year over year, with a net new unit contribution of 8%[2] - KFC opened 307 net new stores, more than double the previous year's openings, contributing to a 7% system sales growth[6] - Pizza Hut opened 113 net new stores, a 40% increase from the prior year, with system sales growing by 4%[9] - Company sales for KFC were $2,193 million, up 1% from $2,166 million in the same quarter last year[21] - Total revenues for Q1 2024 reached $2,958 million, a 1% increase from $2,917 million in Q1 2023[20] Profit Margins - Operating profit margin was 12.6%, down from 14.3% in the prior year, primarily due to increased costs[4] - The restaurant margin for KFC decreased to 19.3%, down from 22.2% in Q1 2023, reflecting a 2.9 percentage point decline[21] - Core OP margin decreased to 12.7% in Q1 2024 from 13.5% in Q1 2023, a decline of 0.8 percentage points[46] - The restaurant profit for the quarter was $493 million, with a restaurant margin of 17.6%[51] - The restaurant margin for KFC was 19.3%, while Pizza Hut's margin was 12.5%[51] Shareholder Returns - Yum China returned approximately $745 million to shareholders, the highest quarterly return in the company's history[2] - The company plans to open approximately 1,500 to 1,700 net new stores in 2024 and return a record $1.5 billion to shareholders[11] - The company repurchased $679 million worth of common stock during the quarter, significantly higher than the $60 million repurchased in the same quarter of the previous year[27] Assets and Liabilities - Total assets decreased from $12,031 million on December 31, 2023, to $11,295 million on March 31, 2024, a decline of approximately 6.1%[25] - Total current liabilities decreased from $2,422 million on December 31, 2023, to $2,263 million on March 31, 2024, a reduction of approximately 6.6%[25] - The company’s equity decreased from $7,106 million on December 31, 2023, to $6,575 million on March 31, 2024, a decline of approximately 7.5%[25] Cash Flow - Net cash provided by operating activities was $442 million for the quarter, compared to $507 million for the same period last year, reflecting a decrease of about 12.8%[27] - Cash, cash equivalents, and restricted cash decreased from $1,128 million at the beginning of the period to $883 million at the end of the period[27] Franchise and Other Revenues - Franchise fees and income for the company totaled $25 million, a 2% increase from $25 million in Q1 2023[20] - Other revenues increased by 18% to $32 million, compared to $27 million in the same quarter last year[20] - The company reported a decrease in other revenues, resulting in a net impact of $(157) million[51]

Yum China Holdings (YUMC) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.The power of a c ...

Analysts on Wall Street project that Yum China Holdings (YUMC) will announce quarterly earnings of $0.66 per share in its forthcoming report, representing a decline of 4.4% year over year. Revenues are projected to reach $2.94 billion, increasing 0.8% from the same quarter last year.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.Prior to a company's e ...

SHANGHAI, April 11, 2024 /PRNewswire/ -- Joey Wat, Chief Executive Officer of Yum China Holdings, Inc. (the "Company" or "Yum China", NYSE: YUMC and HKEX: 9987) released her annual letter to stockholders today together with the Company's 2023 Annual Report. The letter recapped Yum China's strong 2023 results, the Company's enduring commitment to stockholder return, as well as its pioneering innovation capabilities and ambitious plans for continued expansion. "2023 was a landmark year for Yum China, one of o ...

Core Viewpoint - Yum China Holdings, Inc. has published its seventh annual Sustainability Report, highlighting its achievements and ongoing progress towards Environmental, Social, and Governance (ESG) goals across four focus areas: Environment, Food, People, and Community [1][2]. Environmental Initiatives - In 2023, Yum China inaugurated the first 100% renewable energy cold-chain logistics center in China, transitioning over 70 restaurants and three logistics centers to green electricity, achieving an annual renewable energy consumption of approximately 8,000 MWh [1]. - The company established the 'Yum China DPV and VPPA Alliance' with 40 key suppliers to promote renewable energy adoption within its supply chain [1]. - Yum China built five coffee grounds disposal centers nationwide as part of its coffee grounds recycling initiative, using environmentally-friendly materials in over 1,500 KFC restaurants [1]. Technological Advancements - The company began exploring generative artificial intelligence for its Food Safety Risk Assessment and Early Warning System, allowing for a multidimensional assessment of food safety risks [1]. Social Responsibility - Yum China expanded its 'YUMC Care' benefits program in 2023, enhancing medical and accident insurance coverage for employees' family members [1]. - The One Yuan Donation initiative has raised over RMB 260 million for poverty alleviation and rural revitalization, improving nutrition and digital education access for children in rural areas [1]. - The company provided over RMB 3 million in financial assistance and tens of thousands of meals to those affected by Typhoon Doksuri and the Gansu earthquake in December 2023 [1]. Recognition and Commitment - Yum China ranked No.1 in the Restaurant & Leisure Facilities Industry in the S&P Global Corporate Sustainability Assessment for the fourth consecutive year and received a 'Top 1% Global ESG Score' in the S&P Global Sustainability Yearbook 2024 [3]. - The company attained an "AA" rating in the MSCI ESG rating, the highest in its industry, and joined the United Nations Global Compact, committing to responsible operations based on ten universally accepted principles [3].