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YUM CHINA(YUMC) - 2024 Q3 - Quarterly Results
YUMCYUM CHINA(YUMC)2024-11-04 11:06

Revenue Growth and Performance - Total system sales grew 4% YoY, driven by 7% net new unit contribution[2] - Total revenues increased 5% YoY to 3.07billion,anall−timequarterhigh[2]−Totalrevenuesforthequarterended9/30/2024increasedby53.07 billion, an all-time quarter high[2] - Total revenues for the quarter ended 9/30/2024 increased by 5% to 3,071 million compared to 2,914millioninthesameperiodlastyear[21]−Companysalesforthequarterended9/30/2024grewby52,914 million in the same period last year[21] - Company sales for the quarter ended 9/30/2024 grew by 5% to 2,895 million from 2,759millionintheprioryear[21]−TotalrevenuesforQ32024amountedto2,759 million in the prior year[21] - Total revenues for Q3 2024 amounted to 3,071 million, with KFC contributing 2,311millionandPizzaHut2,311 million and Pizza Hut 615 million[50] - Total revenues for the year to date ended 9/30/2023 were 8.485billion,withKFCcontributing8.485 billion, with KFC contributing 6.368 billion and Pizza Hut 1.750billion[58]−Totalcompanysalesacrossallsegmentsamountto1.750 billion[58] - Total company sales across all segments amount to 8.048 billion, with KFC contributing 6.274billionandPizzaHut6.274 billion and Pizza Hut 1.728 billion[59] Store Expansion and Count - Total store count reached 15,861, including 11,283 KFC stores and 3,606 Pizza Hut stores, with 438 net new stores opened in Q3[2] - Pizza Hut opened 102 net new stores during the quarter, with 15 net new stores opened by franchisees, reaching a total store count of 3,606 as of September 30, 2024[9] - The company targets to open approximately 1,500 to 1,700 net new stores in the 2024 fiscal year[10] - KFC's total units increased to 11,283 as of 9/30/2024, up from 10,296 at the end of 2023, with 1,189 new builds and 202 closures[32] - Pizza Hut's total units grew to 3,606 as of 9/30/2024, compared to 3,312 at the end of 2023, with 406 new builds and 112 closures[32] - Other brands' total units decreased to 972 as of 9/30/2024 from 1,036 at the end of 2023, with 110 new builds and 174 closures[32] Delivery and Digital Sales - Delivery sales grew 18% YoY, contributing approximately 40% of KFC and Pizza Hut's Company sales[2] - Digital sales reached 2.61billion,accountingforapproximately902.61 billion, accounting for approximately 90% of total Company sales[2] - Delivery sales grew 11% YoY, contributing approximately 39% of Pizza Hut's Company sales for the quarter[9] Membership and Customer Engagement - Total membership of KFC and Pizza Hut exceeded 510 million, with member sales accounting for approximately 64% of system sales[2] Operating Profit and Margins - Operating profit grew 15% YoY to 371 million, with core operating profit increasing 18% YoY[2] - Operating profit for the quarter ended 9/30/2024 rose by 15% to 371millioncomparedto371 million compared to 323 million in the same period last year[21] - Operating profit for Q3 2024 was 371million,withKFCleadingat371 million, with KFC leading at 364 million and Pizza Hut at 52million[50][51]−CoreoperatingprofitforQ32024was52 million[50][51] - Core operating profit for Q3 2024 was 369 million, adjusted for special items and FX impact[51] - Core operating profit for the quarter ended 9/30/2024 was 369million,an18369 million, an 18% increase from 312 million in the prior year period[43] - The company's core operating profit margin improved to 12.1% in the quarter ended 9/30/2024, up 1.4 percentage points from 10.7% in the prior year period[43] - Adjusted operating profit, excluding special items, is 1.005billion,withKFCat1.005 billion, with KFC at 1.035 billion and Pizza Hut at 137million[60]−Coreoperatingprofit,afteradjustingforitemsaffectingcomparability,is137 million[60] - Core operating profit, after adjusting for items affecting comparability, is 951 million, with KFC at 991millionandPizzaHutat991 million and Pizza Hut at 129 million[60] Earnings and Shareholder Returns - Diluted EPS increased 33% YoY to 0.77[2]−Thecompanyplanstostepupcapitalreturnstoshareholdersby500.77[2] - The company plans to step up capital returns to shareholders by 50% to 4.5 billion for 2024-2026[1] - The company aims to return a record-setting 1.5billiontoshareholdersthroughquarterlycashdividendsandsharerepurchasesin2024[10]−NetincomeforYumChinaHoldings,Inc.forthequarterended9/30/2024increasedby221.5 billion to shareholders through quarterly cash dividends and share repurchases in 2024[10] - Net income for Yum China Holdings, Inc. for the quarter ended 9/30/2024 increased by 22% to 297 million from 244millionintheprioryear[21]−Basicearningspercommonshareforthequarterended9/30/2024were244 million in the prior year[21] - Basic earnings per common share for the quarter ended 9/30/2024 were 0.77, up from 0.59inthesameperiodlastyear[21]−Dilutedearningspercommonshareforthequarterended9/30/2024were0.59 in the same period last year[21] - Diluted earnings per common share for the quarter ended 9/30/2024 were 0.77, compared to 0.58intheprioryear[21]−Netincomeforthequarterended9/30/2024was0.58 in the prior year[21] - Net income for the quarter ended 9/30/2024 was 297 million, compared to 244millioninthesameperiodlastyear,representinga21.7244 million in the same period last year, representing a 21.7% increase[39][40] - Adjusted EBITDA for the quarter ended 9/30/2024 was 501 million, up 13.6% from 441millionintheprioryearperiod[40]−Basicearningspershareforthequarterended9/30/2024was441 million in the prior year period[40] - Basic earnings per share for the quarter ended 9/30/2024 was 0.77, up from 0.59inthesameperiodlastyear[39]−Thecompany′sadjusteddilutedearningspershareforthequarterended9/30/2024was0.59 in the same period last year[39] - The company's adjusted diluted earnings per share for the quarter ended 9/30/2024 was 0.77, compared to 0.59intheprioryearperiod[39]−Repurchaseofsharesofcommonstockamountedto0.59 in the prior year period[39] - Repurchase of shares of common stock amounted to 1,057 million for the year to 9/30/2024, significantly higher than the 280millioninthepreviousyear[29]−Cashdividendspaidoncommonstockincreasedto280 million in the previous year[29] - Cash dividends paid on common stock increased to 187 million for the year to 9/30/2024 from 162millioninthesameperiodlastyear[29]CostsandExpenses−Foodandpapercostsasapercentageofcompanysalesincreasedby0.6percentagepointsto31.7162 million in the same period last year[29] Costs and Expenses - Food and paper costs as a percentage of company sales increased by 0.6 percentage points to 31.7% for the quarter ended 9/30/2024[21] - Payroll and employee benefits as a percentage of company sales decreased by 0.2 percentage points to 25.1% for the quarter ended 9/30/2024[21] - Occupancy and other operating expenses as a percentage of company sales decreased by 0.4 percentage points to 26.2% for the quarter ended 9/30/2024[21] - KFC's food and paper costs increased by 7% to 713 million in Q3 2024 compared to 666millioninQ32023[22]−PizzaHut′sfoodandpapercostsroseby7666 million in Q3 2023[22] - Pizza Hut's food and paper costs rose by 7% to 202 million in Q3 2024 compared to 187millioninQ32023[23]−TotalcostsandexpensesforQ32024were187 million in Q3 2023[23] - Total costs and expenses for Q3 2024 were 2,700 million, with company restaurant expenses being the largest component at 2,401million[50]−Thecompany′scentralprocurementmodelinvolvesrevenuesandexpensesfromtransactionswithfranchisees,totaling2,401 million[50] - The company's central procurement model involves revenues and expenses from transactions with franchisees, totaling 282 million in revenues and 270millioninexpenses[59][62]SegmentPerformance(KFCandPizzaHut)−SystemsalesforPizzaHutgrew2270 million in expenses[59][62] Segment Performance (KFC and Pizza Hut) - System sales for Pizza Hut grew 2% YoY in the quarter, primarily driven by net new unit contribution of 7%[8] - Same-store sales reached 94% of the prior year's level, improved from 92% in the second quarter[8] - Operating profit grew 13% YoY to 52 million, with core operating profit increasing 20% YoY[9] - OP margin was 8.6%, an increase of 80 basis points YoY[9] - Restaurant margin was 12.8% for the quarter, up 60 basis points YoY excluding items affecting comparability[9] - KFC's total revenues increased by 6% to 2.311billioninQ32024comparedto2.311 billion in Q3 2024 compared to 2.186 billion in Q3 2023[22] - KFC's operating profit margin improved by 0.1 percentage points to 15.7% in Q3 2024[22] - Pizza Hut's total revenues grew by 2% to 615millioninQ32024comparedto615 million in Q3 2024 compared to 599 million in Q3 2023[23] - Pizza Hut's operating profit margin increased by 0.8 percentage points to 8.6% in Q3 2024[23] - KFC's company sales rose by 6% to 2.276billioninQ32024comparedto2.276 billion in Q3 2024 compared to 2.154 billion in Q3 2023[22] - Pizza Hut's company sales increased by 2% to 606millioninQ32024comparedto606 million in Q3 2024 compared to 591 million in Q3 2023[23] - KFC's franchise fees and income grew by 15% to 19millioninQ32024comparedto19 million in Q3 2024 compared to 16 million in Q3 2023[22] - Pizza Hut's franchise fees and income increased by 8% to 2millioninQ32024comparedto2 million in Q3 2024 compared to 2 million in Q3 2023[23] - KFC company sales for Q3 2024 reached 2,276million,contributingsignificantlytothetotalcompanysalesof2,276 million, contributing significantly to the total company sales of 2,895 million[50] - Pizza Hut company sales for Q3 2024 were 606million,showingasteadyperformance[50]−RestaurantmarginforKFCinQ32024was18.3606 million, showing a steady performance[50] - Restaurant margin for KFC in Q3 2024 was 18.3%, while Pizza Hut had a margin of 12.7%[50][53] - KFC's GAAP operating profit for the quarter ended 9/30/2023 was 342 million, while Pizza Hut's was 47million[54]−Totalcompanysalesfortheyeartodateended9/30/2024were47 million[54] - Total company sales for the year to date ended 9/30/2024 were 8.217 billion, with KFC contributing 6.452billionandPizzaHut6.452 billion and Pizza Hut 1.723 billion[55] - KFC's restaurant margin percentage for the year to date ended 9/30/2024 was 18.0%, while Pizza Hut's was 12.8%[56] - The core operating profit for KFC, adjusted for F/X impact, was 1.027billionfortheyeartodateended9/30/2024[57]−KFC′sGAAPoperatingprofitfortheyeartodateended9/30/2023is1.027 billion for the year to date ended 9/30/2024[57] - KFC's GAAP operating profit for the year to date ended 9/30/2023 is 1.035 billion, while Pizza Hut's is 137million[59]−TotalGAAPoperatingprofitforallsegmentscombinedis137 million[59] - Total GAAP operating profit for all segments combined is 996 million, with corporate and unallocated expenses at (156)million[59]−KFC′srestaurantmarginpercentageis19.4(156) million[59] - KFC's restaurant margin percentage is 19.4%, significantly higher than Pizza Hut's 13.1%[59] Financial Position and Cash Flow - Cash and cash equivalents increased to 1,193 million as of 9/30/2024, up from 1,128millionattheendof2023[26]−Netincomeincludingnoncontrollinginterestsroseto1,128 million at the end of 2023[26] - Net income including noncontrolling interests rose to 854 million for the year to 9/30/2024, compared to 794millioninthesameperiodlastyear[29]−Totalassetsdecreasedslightlyto794 million in the same period last year[29] - Total assets decreased slightly to 11,801 million as of 9/30/2024 from 12,031millionattheendof2023[26]−Netcashprovidedbyoperatingactivitieswas12,031 million at the end of 2023[26] - Net cash provided by operating activities was 1,252 million for the year to 9/30/2024, down from 1,334millioninthepreviousyear[29]−Capitalspendingfortheyearto9/30/2024was1,334 million in the previous year[29] - Capital spending for the year to 9/30/2024 was 523 million, slightly higher than the 499millionspentinthesameperiodlastyear[29]TaxandOtherFinancialMetrics−Thecompany′seffectivetaxrateforthequarterended9/30/2024was27.3499 million spent in the same period last year[29] Tax and Other Financial Metrics - The company's effective tax rate for the quarter ended 9/30/2024 was 27.3%, slightly lower than 27.5% in the prior year period[39] - Store impairment charges for the quarter ended 9/30/2024 were 10 million, compared to 3millioninthesameperiodlastyear[40]−Temporaryrelieffromlandlordsandgovernmentagenciesreducedoperatingprofitby3 million in the same period last year[40] - Temporary relief from landlords and government agencies reduced operating profit by 10 million and 4millionrespectively[60]−VATdeductionshadasignificantimpact,reducingoperatingprofitby4 million respectively[60] - VAT deductions had a significant impact, reducing operating profit by 42 million, with KFC accounting for 34millionofthatreduction[60]FranchisePerformance−FranchisefeesandincomeforQ32024totaled34 million of that reduction[60] Franchise Performance - Franchise fees and income for Q3 2024 totaled 25 million, with KFC contributing 19million[50]−RevenuesfromtransactionswithfranchiseesinQ32024were19 million[50] - Revenues from transactions with franchisees in Q3 2024 were 116 million, with KFC contributing 15millionandPizzaHut15 million and Pizza Hut 19 million[50] - Other revenues for Q3 2024 were 35million,withsignificantcontributionsfromothersegmentsat35 million, with significant contributions from other segments at 176 million[50]