YUM CHINA(YUMC) - 2024 Q4 - Annual Results

Financial Performance - Fourth quarter operating profit grew 36% YoY to $151 million, with an operating profit margin of 5.8%, an increase of 140 basis points YoY[5][7] - Total revenues for the fourth quarter increased 4% YoY to $2.6 billion, a record high for the quarter[5][6] - For the full year, operating profit rose 5% YoY to $1.2 billion, with a core operating profit increase of 12% YoY[5][6] - Net income for Yum China Holdings, Inc. was $115 million for the quarter, up 18% from $97 million in the same quarter last year[31] - Net income for the year ended December 31, 2024, was $980 million, up from $901 million in 2023, representing an increase of 9%[41] - Total revenues for the year ended December 31, 2024, were $11,303 million, a 2.9% increase from $10,978 million in 2023[56] - Operating profit for 2024 was $1,162 million, a slight decrease from $1,106 million in 2023, reflecting a decline of 5.1%[64] Sales and Revenue Growth - Same-store sales reached 99% of the prior year's level, marking the eighth consecutive quarter of same-store transaction growth[5][6] - Digital sales reached $9.6 billion, accounting for approximately 90% of total company sales[5][6] - Company sales for Q4 2024 reached $2,434 million, an increase from $2,343 million in Q4 2023, representing a growth of 3.9%[61] - Company sales for the year ended 12/31/2024 reached $10,651 million, an increase from $10,391 million in 2023, representing a growth of 2.5%[63] Store Expansion and Operations - The company opened 534 net new stores in the fourth quarter, bringing the total store count to 16,395 as of December 31, 2024[5][6] - The company plans to open approximately 1,600 to 1,800 net new stores and allocate capital expenditures of $700 million to $800 million for the 2025 fiscal year[21] - Yum China operates over 16,000 restaurants across more than 2,200 cities in China, making it the largest restaurant company in the country[27] Franchise and Membership - Total membership for KFC and Pizza Hut exceeded 525 million, up 11% YoY, with member sales accounting for approximately 65% of system sales[5][6] - Franchise fees and income for the quarter increased by 8% to $22 million compared to $20 million in the same quarter last year[31] - Revenues from transactions with franchisees rose by 14% to $101 million for the quarter, up from $90 million in the previous year[31] - Franchise fees and income increased by 10% to $2 million in the quarter compared to $1 million in the same quarter last year[37] - Franchise fees and income for 2024 totaled $94 million, up from $89 million in 2023, marking a growth of 5.6%[64] Profitability and Margins - The operating profit margin was 2.6%, reflecting an increase of 160 basis points YoY[21] - The restaurant margin for KFC in 2024 was 16.9%, while Pizza Hut reported a margin of 12.0%, leading to an overall restaurant margin of 15.7%[63] - The company achieved a restaurant margin of 12.0%, with an expansion of 60 basis points YoY due to operational efficiency and favorable commodity prices[21] Shareholder Returns - The company plans to return a total of $4.5 billion to shareholders between 2024 and 2026, including a 50% increase in cash dividends[10][12] - Yum China aims to return $3 billion to shareholders from 2025 through 2026, in addition to the $1.5 billion returned in 2024[21] - The company repurchased $1,249 million worth of common stock during the year, compared to $613 million in the previous year[41] Tax and Expenses - The effective tax rate for the quarter was 27.6%, an increase of 3.4 percentage points from 24.2% in the previous year[31] - Total costs and expenses for the quarter were $2,444 million, a 3% increase from $2,383 million in the prior year[31] - General and administrative expenses for 2024 were $568 million, a decrease from $638 million in 2023, reflecting a reduction of 10.9%[64] - The total costs and expenses for 2024 were $10,141 million, up from $9,872 million in 2023, representing an increase of 2.7%[64] Operational Highlights - KFC's system sales grew 5% YoY, with delivery sales contributing approximately 42% of KFC's company sales[16] - Pizza Hut's operating profit increased 156% YoY in the fourth quarter, reaching $14 million[15] - Pizza Hut's system sales grew 3% YoY, with same-store sales reaching 98% of the prior year's level, an improvement from 94% in Q3[21] - Delivery sales for Pizza Hut increased by 6% YoY, contributing approximately 42% of the company's total sales[21] - The company reported a restaurant profit of $301 million for Q4 2024, compared to $253 million in Q4 2023, which is an increase of 19%[62]