YUM CHINA(US:YUMC)2024-11-04 11:06Revenue Growth and Performance - Total system sales grew 4% YoY, driven by 7% net new unit contribution[2] - Total revenues increased 5% YoY to $3.07 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 $2,914 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 $2,759 million in the prior year[21] - Total revenues for Q3 2024 amounted to $3,071 million, with KFC contributing $2,311 million and Pizza Hut $615 million[50] - Total revenues for the year to date ended 9/30/2023 were $8.485 billion, with KFC contributing $6.368 billion and Pizza Hut $1.750 billion[58] - Total company sales across all segments amount to $8.048 billion, with KFC contributing $6.274 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 $2.61 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 $371 million compared to $323 million in the same period last year[21] - Operating profit for Q3 2024 was $371 million, with KFC leading at $364 million and Pizza Hut at $52 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 $369 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 $1.005 billion, with KFC at $1.035 billion and Pizza Hut at $137 million[60] - Core operating profit, after adjusting for items affecting comparability, is $951 million, with KFC at $991 million and Pizza Hut at $129 million[60] Earnings and Shareholder Returns - Diluted EPS increased 33% YoY to $0.77[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 $1.5 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 $244 million in the prior year[21] - Basic earnings per common share for the quarter ended 9/30/2024 were $0.77, up from $0.59 in the same period last year[21] - Diluted earnings per common share for the quarter ended 9/30/2024 were $0.77, compared to $0.58 in the prior year[21] - Net income for the quarter ended 9/30/2024 was $297 million, compared to $244 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 $441 million in the prior year period[40] - Basic earnings per share for the quarter ended 9/30/2024 was $0.77, up from $0.59 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 $0.59 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 $280 million in the previous year[29] - Cash dividends paid on common stock increased to $187 million for the year to 9/30/2024 from $162 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 $666 million in Q3 2023[22] - Pizza Hut's food and paper costs rose by 7% to $202 million in Q3 2024 compared to $187 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 $2,401 million[50] - The company's central procurement model involves revenues and expenses from transactions with franchisees, totaling $282 million in revenues and $270 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 $2.311 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 $615 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 $2.276 billion in Q3 2024 compared to $2.154 billion in Q3 2023[22] - Pizza Hut's company sales increased by 2% to $606 million in Q3 2024 compared to $591 million in Q3 2023[23] - KFC's franchise fees and income grew by 15% to $19 million in Q3 2024 compared to $16 million in Q3 2023[22] - Pizza Hut's franchise fees and income increased by 8% to $2 million in Q3 2024 compared to $2 million in Q3 2023[23] - KFC company sales for Q3 2024 reached $2,276 million, contributing significantly to the total company sales of $2,895 million[50] - Pizza Hut company sales for Q3 2024 were $606 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 $47 million[54] - Total company sales for the year to date ended 9/30/2024 were $8.217 billion, with KFC contributing $6.452 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 $1.027 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 $137 million[59] - Total GAAP operating profit for all segments combined is $996 million, with corporate and unallocated expenses at $(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 $1,128 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 $794 million in the same period last year[29] - Total assets decreased slightly to $11,801 million as of 9/30/2024 from $12,031 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 $1,334 million in the previous year[29] - Capital spending for the year to 9/30/2024 was $523 million, slightly higher than the $499 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 $3 million in the same period last year[40] - Temporary relief from landlords and government agencies reduced operating profit by $10 million and $4 million respectively[60] - VAT deductions had a significant impact, reducing operating profit by $42 million, with KFC accounting for $34 million of that reduction[60] Franchise Performance - Franchise fees and income for Q3 2024 totaled $25 million, with KFC contributing $19 million[50] - Revenues from transactions with franchisees in Q3 2024 were $116 million, with KFC contributing $15 million and Pizza Hut $19 million[50] - Other revenues for Q3 2024 were $35 million, with significant contributions from other segments at $176 million[50]