Financial Performance - Total revenue for the quarter ended June 30, 2021, was $2,451 million, a 29% increase from $1,902 million in the same quarter of 2020[4] - Net profit for the quarter was $193 million, compared to $136 million in the same quarter of 2020, representing a 42% increase[4] - The company restaurant revenue reached $2,233 million for the quarter, up 32% from $1,692 million in the same quarter of 2020[4] - The operating profit for the quarter was $233 million, compared to $128 million in the same quarter of 2020, marking an 82% increase[4] - Total comprehensive income for the quarter was $251 million, compared to $143 million in the same quarter of 2020, indicating a 75% increase[5] - The company reported a diluted earnings per share of $0.42 for the quarter, up from $0.34 in the same quarter of 2020, a 24% increase[4] - Net profit for the six months ended June 30, 2021, was $436 million, compared to $202 million for the same period in 2020, representing a 116% increase[6] - Cash generated from operating activities was $773 million, up from $452 million in the previous year, indicating a 71% increase[6] - Total revenue for the six months ending June 30, 2021, was $5,087 million, with KFC at $3,566 million and Pizza Hut at $1,079 million[22] - The company reported a net profit before tax of $257 million for the quarter ended June 30, 2021, compared to $181 million for the same quarter in 2020, representing a growth of approximately 42%[68] Revenue Sources - The company's revenue primarily consists of restaurant income, franchise fees, and transactions with franchisees and joint ventures[14] - Restaurant income is recognized when customers obtain food and make payment, with net amounts shown after deducting relevant sales tax[14] - Franchise fees include upfront fees and ongoing fees, with initial franchise fees recognized as income over the term of the franchise agreement, typically 10 years for KFC and Pizza Hut[16] - Revenue from transactions with franchisees includes sales of food and packaging, as well as advertising and other services provided to franchisees[17] - Total income from other segments was $106 million for the quarter ending June 30, 2021[20] Assets and Liabilities - Total assets as of June 30, 2021, amounted to $11,304 million, compared to $10,875 million at the end of 2020, reflecting a growth of 3.9%[7] - Total liabilities increased to $4,476 million from $4,404 million, marking a 1.6% increase[7] - Shareholders' equity rose to $6,575 million as of June 30, 2021, compared to $6,206 million at the end of 2020, representing a 5.9% increase[7] - The company reported a decrease in inventory from $398 million to $380 million, a decline of 4.5%[7] - The company’s long-term operating lease liabilities increased slightly from $1,915 million to $1,941 million, a rise of 1.4%[7] Market Expansion and Strategy - The company plans to continue expanding its market presence and investing in new product development to drive future growth[4] - The company believes there are significant expansion opportunities within China, focusing on both existing and new cities[76] - The company is exploring market expansion opportunities and new product development to enhance its competitive edge in the fast-food industry[71] - Yum China plans to open 500 new stores in 2024, expanding its market presence significantly[142] Shareholder Returns - The company declared a cash dividend of $0.12 per share for the quarter ended June 30, 2021, totaling $51 million[30] - The board has authorized a share repurchase program totaling $1.4 billion, with $692 million remaining available for future repurchases as of June 30, 2021[34] - The company has suspended share repurchases since the second quarter of 2020, with no shares repurchased in the six months ended June 30, 2021[34] Tax and Regulatory Issues - The company continues to face scrutiny from tax authorities regarding transfer pricing audits from 2006 to 2015, which may impact financial performance[63] - The company is undergoing a tax audit related to transfer pricing, which may have significant adverse effects on its financial condition and operating results[117] - The company anticipates potential significant developments in tax assessments within the next 12 months[63] Operational Performance - KFC and Pizza Hut generated total revenue of $2,505 million for the quarter ending June 30, 2021, with KFC contributing $1,734 million and Pizza Hut $538 million[20] - KFC's system sales growth for the quarter was 25%, with same-store sales growth of 14%[94] - Pizza Hut's total revenue for the quarter was $538 million, a 26% increase from $424 million in 2020[100] - The company reported a restaurant profit margin of 15.8% for Q2 2021, up from 13.7% in Q2 2020[84] Challenges and Risks - The company faces various risks that could significantly affect its future performance, including food safety issues and supply chain disruptions[130] - The company is exposed to commodity price risks affecting food costs, which are managed through pricing agreements with suppliers[134] - The company has limited ability to pass on increased costs due to competitive pressures in its operating environment[134] Investments and Acquisitions - The company completed the acquisition of a 5% stake in Shengnong for approximately $261 million, which is the largest poultry supplier in China[36] - The company is assessing the potential benefits of acquisitions and strategic investments, which may not be realized in a timely manner[130] - The company has a joint venture with Lavazza Group to explore and develop the Lavazza coffee shop brand concept in China[76] E-commerce and Technology - The company has begun its e-commerce business in 2017, allowing customers to purchase various products directly through its platform[8] - The company is investing $100 million in new technology for digital ordering and delivery systems[142] - The company is focusing on enhancing its e-commerce business, which presents its own set of challenges and risks[130]
百胜中国(09987) - 2021 - 中期财报