[Second Quarter 2024 Performance Overview](index=1&type=section&id=Second%20Quarter%202024%20Performance%20Overview) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) The company reported record Q2 revenue and operating profit, driven by new unit contribution and transaction growth despite lower same-store sales Q2 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 | % Change (Reported) | % Change (Ex-F/X) | | :--- | :--- | :--- | :--- | | Total System Sales | - | 4% | 4% | | Total Revenues | $2.68 billion | 1% | 4% | | Same-Store Sales | - | (4%) | (4%) | | Operating Profit | $266 million | 4% | 7% | | Core Operating Profit | $275 million | 12% (NM) | 12% | | Diluted EPS | $0.55 | 17% | 19% | - The company achieved a record first-half opening of **779 net new stores**, reaching a total of **15,423 stores** by the end of Q2 2024[1](index=1&type=chunk)[2](index=2&type=chunk) - **Same-store transactions grew by 4%** year-over-year, indicating robust customer traffic despite a decrease in average ticket size[2](index=2&type=chunk) - **Delivery sales grew 11% YoY**, contributing approximately 38% of KFC and Pizza Hut's Company sales, while digital orders accounted for about **90% of total Company sales**[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted a record profitable quarter driven by value offerings, product innovation, and operational efficiencies that enhanced the company's competitive advantage - The company's strategy centered on **value-for-money and innovative new products**, which successfully drove robust same-store transaction growth[4](index=4&type=chunk) - Operational efficiency was improved by **reducing menu and operational complexity and harnessing automation and AI**, which stabilized restaurant margins[4](index=4&type=chunk) - Brand-specific initiatives were successful: **KFC expanded its price range and lowered delivery fees** to gain market share, while **Pizza Hut attracted value customers** with entry-price pizzas and the Pizza Dough Burger[4](index=4&type=chunk) - New stores continue to deliver strong returns, with a consistent payback period of **2 years for KFC** and an improved **2 to 3 years for Pizza Hut**[4](index=4&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) [KFC](index=3&type=section&id=KFC) KFC's system sales grew 5% driven by new units, though same-store sales declined, and restaurant margin slightly decreased due to value offerings and wage inflation KFC Q2 2024 Performance | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | System Sales Growth | 5% | - | | Same-Store Sales Growth | (3%) | - | | Net New Stores | 328 | - | | Total Stores | 10,931 | +14% | | Operating Profit | $264 million | (3%) | | Core Operating Profit | $273 million | +4% | | Restaurant Margin | 16.2% | (1.1 ppts) | - Restaurant margin decreased by **60 basis points** (excluding items affecting comparability) due to increased value-for-money offerings and wage inflation, partially offset by favorable commodity prices and operational efficiency[7](index=7&type=chunk) - **Delivery sales grew 12% YoY**, contributing approximately 38% of KFC's Company sales[7](index=7&type=chunk) [Pizza Hut](index=4&type=section&id=Pizza%20Hut) Pizza Hut achieved record Q2 operating profit and improved restaurant margins through operational efficiency, despite a decline in same-store sales Pizza Hut Q2 2024 Performance | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | System Sales Growth | 1% | - | | Same-Store Sales Growth | (8%) | - | | Net New Stores | 79 | - | | Total Stores | 3,504 | +14% | | Operating Profit | $40 million | +13% | | Core Operating Profit | $41 million | +23% | | Restaurant Margin | 13.2% | +0.8 ppts | - Restaurant margin increased by **110 basis points** (excluding items affecting comparability) as higher operational efficiency offset the impact of increased value offerings and wage inflation[8](index=8&type=chunk) - **Delivery sales grew 6%** and contributed approximately 38% of Pizza Hut's Company sales[8](index=8&type=chunk) [Shareholder Returns & 2024 Outlook](index=4&type=section&id=Shareholder%20Returns%20%26%202024%20Outlook) [Returns to Shareholders](index=4&type=section&id=Returns%20to%20Shareholders) The company returned $249 million to shareholders in Q2 and a record $994 million in the first half of 2024 through share repurchases and dividends - The company repurchased **5.1 million shares for $187 million** in Q2 2024[9](index=9&type=chunk) - A cash dividend of **$0.16 per share** was declared, payable on September 17, 2024[9](index=9&type=chunk) - In the first half of 2024, the company returned a **record $994 million** to shareholders, exceeding the full-year 2023 returns[9](index=9&type=chunk) [2024 Outlook](index=4&type=section&id=Outlook) Yum China reaffirmed its 2024 targets, including opening 1,500-1,700 new stores and returning a record $1.5 billion to shareholders - The company's targets for fiscal year 2024 **remain unchanged**[10](index=10&type=chunk) - Key 2024 Targets: - Net new stores: **1,500 to 1,700** - Capital expenditures: **$700 million to $850 million** - Shareholder returns: A record **$1.5 billion**[10](index=10&type=chunk) [Financial Statements & Reconciliations](index=9&type=section&id=Financial%20Statements%20%26%20Reconciliations) [Condensed Consolidated Statements of Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues grew 1% to $2.68 billion in Q2, with net income rising 8% to $212 million and Diluted EPS increasing 17% to $0.55 Condensed Consolidated Statements of Income (Q2 2024 vs Q2 2023) | (in US$ million) | Quarter Ended 6/30/2024 | Quarter Ended 6/30/2023 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | 2,679 | 2,654 | 1% | | Operating Profit | 266 | 257 | 4% | | Net Income – Yum China | 212 | 197 | 8% | | Diluted EPS ($) | 0.55 | 0.47 | 17% | [Condensed Consolidated Balance Sheets](index=13&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets were $11.57 billion and total equity decreased to $6.47 billion, primarily due to significant share repurchases Key Balance Sheet Items (in US$ million) | Item | 6/30/2024 | 12/31/2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 1,043 | 1,128 | | Total Current Assets | 3,281 | 3,431 | | Total Assets | 11,568 | 12,031 | | Total Current Liabilities | 2,678 | 2,422 | | Total Liabilities | 5,086 | 4,912 | | Total Equity | 6,469 | 7,106 | [Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2024, net cash from operations was $843 million, while financing activities used $785 million, largely for share repurchases Cash Flow Summary - Year to Date Ended 6/30 (in US$ million) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 843 | 924 | | Net Cash Used in Investing Activities | (132) | (598) | | Net Cash Used in Financing Activities | (785) | (230) | | **Net (Decrease) Increase in Cash** | **(85)** | **59** | - The company used **$869 million for the repurchase of common stock** in the first half of 2024, a significant increase from $122 million in the same period of 2023[28](index=28&type=chunk) [Reconciliation of Non-GAAP Measures](index=18&type=section&id=Reconciliation%20of%20Reported%20GAAP%20Results%20to%20Non-GAAP%20Measures) This section details adjustments from GAAP to non-GAAP measures like Core Operating Profit to better reflect core operational performance, excluding special items and currency impacts - Non-GAAP measures are provided to facilitate comparison of past and present results by excluding items that management does not believe are indicative of core operations, such as special items, certain items affecting comparability, and foreign currency fluctuations[34](index=34&type=chunk) Reconciliation of Operating Profit to Core Operating Profit (Q2 2024, in US$ million) | Description | Amount | | :--- | :--- | | Operating profit (GAAP) | $266 | | Special Items | $0 | | Adjusted Operating Profit | $266 | | F/X impact | $9 | | **Core Operating Profit** | **$275** | - Comparability with 2023 was affected by prior-year benefits, including **temporary relief from landlords and government agencies, and VAT deductions**, which were not extended into 2024[46](index=46&type=chunk)[47](index=47&type=chunk)

The upcoming report from Yum China Holdings (YUMC) is expected to reveal quarterly earnings of $0.47 per share, indicating no change from the year-ago quarter compared to the year-ago period. Analysts forecast revenues of $2.77 billion, representing an increase of 4.4% year over year.The current level reflects no revision in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over this ...

SHANGHAI, July 24, 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 ...

The market expects Yum China Holdings (YUMC) to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, ...

SHANGHAI, July 21, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced that it will report its unaudited financial results for the second quarter ending June 30, 2024, after the U.S. market closes on Monday, August 5, 2024, U.S. Eastern Time (Tuesday, August 6, 2024, Beijing/Hong Kong Time).Yum China's management will hold an earnings conference call at 8:00 p.m. U.S. Eastern Time on Monday, August 5, 2024 (8:00 a.m. Beijing/Hong Kong Time ...

Editor's note: Seeking Alpha is proud to welcome Three Mile Research as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access. Click here to find out more » loveguli Investment Thesis We assign Yum China (NYSE:YUMC) a buy rating. The recent stock price decline presents an attractive entry point for this industry leader. Despite current challenges, Yum Chin ...

Yum China Holdings, Inc. (YUMC) announced the opening of the 200th store of KFC’s coffee brand, K-COFFEE, in China. The milestone number was achieved upon recent two store openings in Hangzhou East Railway Station and Hangzhou International Airport.The K-COFFEE’s side-by-side store model houses shared kitchen facilities with KFC stores, which help reduce investment and operating costs while providing exceptional value to its customers. Currently, K-COFFEE side-by-side stores are spread out across more than ...

SHANGHAI, July 1, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") is pleased to announce that KCOFFEE has opened its 200th store in China[1], following two new store openings yesterday in Hangzhou East Railway Station and Hangzhou International Airport. KCOFFEE Store in Hangzhou East Railway Station KCOFFEE Store in Hangzhou International Airport KCOFFEE's side-by-side store model, which consists of distinct KCOFFEE storefronts and dining areas wi ...

SHANGHAI, June 17, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China", NYSE: YUMC and HKEX: 9987) and its joint venture partner Lavazza, one of the world's most prominent coffee manufacturers, announced today that they will bring a new partnership between Lavazza and iconic super sports car producer Automobili Lamborghini to the China market. Starting June 18, Lavazza will introduce a limited-time co-branded "LAVAZZA Shakerato" drink with Automobili Lamborghini in China, showcasing ...

SHANGHAI, June 3, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China", NYSE: YUMC and HKEX: 9987) today announced that in celebration of Children's Day in China, over 4 million toy set meals have been sold this year as of June 2. Building on its long-term collaboration, KFC China teamed up with Pokémon again this year, offering six new Pokémon toys for this year, designed to appeal to fans of all ages. The exciting lineup included a Gengar memory game, a popular gaming toy; a Pikachu ...