Core Viewpoint - Yum China Holdings, Inc. will report its unaudited financial results for the first quarter ended March 31, 2025, on April 30, 2025, before the U.S. market opens [1] Financial Reporting - The earnings conference call will take place at 7:00 a.m. U.S. Eastern Time on April 30, 2025, which corresponds to 7:00 p.m. Beijing/Hong Kong Time on the same day [2] - A live webcast of the earnings call will be available, and participants must register in advance to receive dial-in numbers and a unique access PIN [2][3] - A replay of the webcast will be accessible two hours after the event and will remain available until April 29, 2026 [3] Company Overview - Yum China is the largest restaurant company in China, operating over 16,000 restaurants under six brands across approximately 2,200 cities [4] - The leading brands include KFC in the quick-service segment and Pizza Hut in the casual dining segment [4] - The company has partnered with Lavazza to develop a coffee concept in China and operates brands specializing in Chinese cuisine, such as Little Sheep and Huang Ji Huang, as well as Taco Bell for Mexican-inspired food [4] - Yum China boasts a digitalized supply chain with a nationwide logistics network and an in-house supply chain management system, enhancing customer reach and service [4] - The company is recognized as a Fortune 500 entity with a vision to be the world's most innovative pioneer in the restaurant industry [4]

SHANGHAI, April 7, 2025 /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced that it has published its 2024 Sustainability Report. This report outlines the achievements and ongoing progress towards Yum China's sustainability goals in three focus areas: People, Environment and Food.Key highlights from the report include: Yum China is dedicated to the "People First" philosophy, focusing on effectively supporting our frontline staff and maintaining ...

Company Overview - Yum China Holdings, Inc. is the largest quick-service restaurant player in China, operating over 16,000 restaurants across more than 2,200 locations [1] Financial Performance - The company demonstrates resilience in a challenging macroeconomic environment, maintaining solid topline growth [1]

Core Viewpoint - Yum China Holdings, Inc. (YUMC) has experienced a 10.8% stock price increase over the past three months, outperforming the industry average of 3.6%, driven by unit expansion, menu innovation, and digitalization efforts, despite concerns regarding an uncertain macro environment [1] Group 1: Growth Drivers - The company is focused on aggressive unit growth, having opened 534 net new stores in Q4 2024, bringing the total to 16,395, with KFC and Pizza Hut showing strong performance and quick payback periods of two to three years [2] - Yum China is optimistic about long-term growth in China, targeting underserved areas and enhancing accessibility through customized store formats, aiming for a franchise proportion of 40-50% for KFC and 20-30% for Pizza Hut in the coming years [3] - Menu innovation plays a crucial role, with KFC and Pizza Hut regularly introducing new items that cater to evolving consumer preferences, maintaining transaction growth while broadening the customer base [4] Group 2: Digitalization and Sales - The company has significantly invested in digitization, with digital sales reaching $9.6 billion in 2024, accounting for approximately 90% of total sales, supported by automation and AI to enhance customer experience [5] Group 3: Cost Concerns - Yum China faces high structural costs related to labor and rentals, with total costs and expenses rising to $2.44 billion in Q4 2024 from $2.38 billion in the previous year, and anticipates a 5.4% increase in restaurant expenses to $9.5 billion in 2025 due to wage inflation [7]

Company Overview - Yum China Holdings, Inc. is the largest restaurant company in China, operating over 16,000 restaurants across more than 2,200 cities under six brands, including KFC and Pizza Hut, which are leaders in their respective segments [6] - The company has a mission to make every life taste beautiful and aims to be the world's most innovative pioneer in the restaurant industry [6] Leadership Appointment - Adrian Ding has been appointed as Chief Financial Officer, effective March 6, 2025, after serving as Acting CFO since October 2024 [1] - CEO Joey Wat expressed confidence in Adrian's ability to drive the company's RGM 2.0 strategy, highlighting his significant contributions over the past five months [2] Adrian Ding's Background - Adrian joined Yum China in March 2019 as Vice President of Corporate Finance and served as Chief Investment Officer from February 2020 to March 2025 [2] - He has led multiple investment and capital markets projects, including acquisitions and strategic investments in supply chain and technology [2] - Prior to Yum China, Adrian worked at Alibaba Group and has extensive experience in investment banking with firms like UBS, Morgan Stanley, and Citigroup [3]

Cash Flow and Capital Management - Net cash provided by operating activities decreased to $1,419 million in 2024 from $1,473 million in 2023, primarily due to working capital changes[440]. - Net cash used in investing activities significantly decreased to $178 million in 2024 from $743 million in 2023, mainly due to changes in short-term investments and long-term deposits[440]. - Net cash used in financing activities increased to $1,636 million in 2024 from $716 million in 2023, driven by increased share repurchases and repayment of short-term borrowings[441]. - The company repurchased 31.3 million shares for $1,242 million in 2024, compared to 12.4 million shares for $617 million in 2023[446]. - Total cash dividends paid increased to $248 million in 2024 from $216 million in 2023, with a quarterly dividend of $0.16 per share in 2024[447]. - The company plans to increase capital returns to shareholders from $3 billion to $4.5 billion between 2024 and 2026, representing a 50% increase[448]. - Fiscal year 2025 capital expenditures are expected to be in the range of approximately $700 million to $800 million[443]. - As of December 31, 2024, the company had unused credit facilities of approximately $1,041 million[451]. - Material cash requirements as of December 31, 2024, totaled $3,172 million, with significant obligations related to operating leases and finance leases[452]. - The company has entered into share repurchase agreements for approximately $360 million for the first half of 2025[448]. Intangible Assets and Impairment - The company evaluated indefinite-lived intangible assets, with a book value of $123 million and $127 million as of December 31, 2024 and 2023, respectively, related to the Little Sheep and Huang Ji Huang trademarks, concluding no impairment charges were necessary for 2024 and 2023[466][467]. - Goodwill amounted to $1,880 million as of December 31, 2024, associated with KFC, Pizza Hut, Huang Ji Huang, and Lavazza reporting units, with no impairment charges recorded for 2024 and 2023[472]. - The company performed qualitative impairment assessments for its trademarks and concluded that it was more likely than not that the assets were not impaired, resulting in no impairment charges recorded[467]. - The company continues to evaluate its long-lived assets for impairment semi-annually, based on forecasted undiscounted cash flows and market participant assumptions[463][464]. - The discount rate used in fair value calculations for goodwill and intangible assets reflects the required rate-of-return expected by a third-party buyer, which is influenced by the risks and uncertainties of forecasted cash flows[470][471]. - The company’s estimates of future cash flows for impairment assessments are highly subjective and can be significantly impacted by changes in business or economic conditions[471]. Tax and Regulatory Matters - The company had $19 million and $20 million of unrecognized tax benefits as of December 31, 2024 and 2023, respectively, related to uncertainties in the deductibility of certain business expenses[478]. - The total temporary difference for which the company has not provided foreign withholding taxes is approximately $3 billion as of December 31, 2024, with a foreign withholding tax rate of 5% or 10% depending on the repatriation method[480]. - The company has been under a national audit on transfer pricing by the STA in China since 2016, which may lead to significant developments in the next 12 months[479]. Share-Based Compensation - The fair value of share-based compensation is estimated using models that require subjective assumptions, which can materially affect the fair value estimate and, consequently, the company's operating profit and net income[474][477].

Group 1 - The article provides an update on Yum China Holdings (NYSE: YUMC) following a previous buy recommendation due to a robust growth outlook [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and strong balance sheets [1] - There is a common misconception that low multiple stocks are necessarily cheap, but the author argues that price matters less when the growth potential is significant [1] Group 2 - The article does not contain any disclosures related to stock positions or business relationships with the companies mentioned [2] - It is noted that past performance does not guarantee future results, and no specific investment advice is provided [3]

Core Insights - Yum China Holdings, Inc. (YUMC) reported fourth-quarter 2024 results with earnings exceeding expectations but revenues falling short, showing year-over-year growth in both metrics [1][3]. Financial Performance - Adjusted earnings per share (EPS) for Q4 were 30 cents, beating the Zacks Consensus Estimate of 29 cents by 3.5%, and reflecting a 20% increase year-over-year [3]. - Total revenues reached $2,595 million, missing the consensus estimate of $2,638 million, but still showing a 4% year-over-year increase [3]. - Total costs and expenses were $2.44 billion, slightly below the expected $2.51 billion, while the restaurant margin improved to 12.3%, up 160 basis points year-over-year [5]. - Adjusted net income was $115 million, compared to $103 million in the prior-year quarter, aligning closely with the estimate of $114.1 million [6]. Operational Highlights - Total system sales, excluding foreign currency translation, increased by 4% year-over-year, driven by a net new unit contribution of 5% [4]. - Same-store sales reached 99% of the previous year's level, with same-store transactions growing by 4% year-over-year [4]. - Yum China opened 534 net new stores in Q4, bringing the total restaurant count to 16,395 [9]. Shareholder Returns - The company announced a 50% increase in its cash dividend to 24 cents per share, scheduled for payment on March 27, 2025 [8]. - Yum China aims to return $4.5 billion to shareholders between 2024 and 2026, having delivered a record $1.5 billion in returns in 2024 [7]. Future Outlook - Yum China expects to open between 1,600 and 1,800 net new stores in 2025, with capital expenditures projected to be between $700 million and $800 million [11]. - The company anticipates a steady increase in the proportion of net new franchised stores, targeting 40-50% for KFC and 20-30% for Pizza Hut in the coming years [10].

Fourth Quarter and Fiscal Year 2024 Results 6 February 2025 NYSE: YUMC and HKEX: 9987 Cautionary Statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not rel ...

Financial Data and Key Metrics Changes - In Q4 2024, system sales grew 4% year over year, with same-store sales index improving to 99% of prior year levels [7][27] - Core operating profit increased by 35%, with diluted EPS growing by 22% [8][33] - For the full year, system sales grew 5%, and net income reached $911 million, up 13% year over year [35][36] Business Line Data and Key Metrics Changes - KFC system sales increased by 6% in 2024, with a same-store sales index reaching 99% of prior year levels [14][27] - Pizza Hut achieved a 5% growth in same-store transactions and opened a record 412 net new stores [19][20] - The retail segment saw over 30% sales growth and became profitable in 2024 [24] Market Data and Key Metrics Changes - KFC expanded its delivery sales by 16%, continuing a decade-long double-digit growth trend [10] - Pizza Hut's ticket average was 10% lower year over year, aligning with its strategy to become more mass-market [29] - The company opened a record 1,751 net new stores in 2024, ending the year with 16,395 stores [8][35] Company Strategy and Development Direction - The company aims to reach 20,000 stores by 2026, with plans to open 1,600 to 1,800 net new stores in 2025 [40] - Focus on operational efficiency and innovation, with initiatives like Project Fresh Eye and Red Eye enhancing business capabilities [46][48] - The company is committed to maintaining healthy restaurant margins for KFC and improving Pizza Hut's margins in the mid to long run [41][100] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic external environment but expressed confidence in maintaining positive same-store transaction growth [42][43] - The company anticipates wage inflation in 2025 but aims to offset this through operational efficiency [40][102] - Management highlighted the importance of innovation and operational efficiency in driving long-term sustainable growth [53][54] Other Important Information - The company plans to return $4.5 billion to shareholders from 2024 through 2026, with a 50% increase in quarterly dividends [36][38] - The company generated $714 million in free cash flow in 2024 and ended the year with $2.8 billion in net cash [37] Q&A Session Summary Question: Insights on the competitive landscape and market share opportunities - Management observed rationalization in marketing promotions and modest price increases, indicating a healthier competitive landscape [60][61] - There are still significant opportunities for market share expansion, particularly in lower-tier cities [67] Question: Implications of new store expansion strategy - The company is aggressively pursuing new store openings in both top-tier and lower-tier cities, with a focus on achieving a two-year payback period [75][76] - Franchise stores are being accelerated to capture incremental opportunities in strategic locations [80] Question: Timing for same-store sales and margin improvements - Management indicated that the same-store sales growth strategy is working, with a focus on maintaining stable ticket averages while driving traffic [92] Question: Future margin improvement trends - The company expects core OP margin to remain stable or slightly improve year over year, with ongoing efforts to optimize costs [99][132] Question: Store economics of the Pizza Hut Wow model - The Pizza Hut Wow model is still maturing, with early signs of significant outperformance in dine-in sales, but margins are still being optimized [115][116] Question: Labor cost dynamics and delivery sales - While delivery sales are increasing, the company is implementing efficiency measures to manage labor costs effectively [130][131] Question: Pricing strategy and its impact on same-store sales - Management plans to continue driving down the ticket average for Pizza Hut while maintaining margin neutrality through innovation [140][141]