YUM CHINA(US:YUMC)2025-05-09 10:03Financial Performance - Net income for the quarter ended March 31, 2025, was $313 million, a slight increase from $307 million in the same quarter of 2024, representing a growth of 1.9%[10] - Comprehensive income for Yum China Holdings, Inc. increased to $315 million in Q1 2025 from $216 million in Q1 2024, reflecting a growth of 46.0%[10] - For the first quarter of 2025, Yum China reported a net income of $292 million, compared to $287 million in the same period of 2024, reflecting a growth of 1.7%[13] - The comprehensive income for the first quarter of 2025 was $340 million, up from $226 million in the first quarter of 2024, indicating a year-over-year increase of 50.4%[13] - Basic Earnings Per Common Share (EPS) increased to $0.78 for the quarter ended March 31, 2025, compared to $0.72 for the same quarter in 2024, reflecting a growth of approximately 8.3%[53] - Operating profit for the quarter ended March 31, 2025, was $399 million, compared to $374 million for the same quarter in 2024, reflecting an increase of about 6.7%[88] - The company reported a net income before income taxes of $428 million for the quarter ended March 31, 2025, compared to $420 million in the same quarter of 2024, reflecting a slight increase of approximately 1.9%[88] Cash Flow and Dividends - Cash provided by operating activities was $452 million for the quarter, compared to $442 million in the prior year, indicating a year-over-year increase of 2.3%[11] - Cash dividends paid on common stock increased to $90 million from $64 million, representing a rise of 40.6%[11] - Cash dividends declared for the first quarter of 2025 were $90 million, equating to $0.24 per common share[13] - The company declared a cash dividend of $0.24 per share, with a total estimated payout of approximately $90 million, payable on June 18, 2025[96] Assets and Liabilities - Total assets decreased to $11,002 million as of March 31, 2025, down from $11,121 million at the end of 2024, a decline of 1.1%[12] - Total liabilities decreased to $4,563 million from $4,694 million, a decline of 2.8%[12] - Cash and cash equivalents increased to $825 million from $723 million, marking a rise of 14.1%[12] - Inventories decreased to $329 million from $405 million, a reduction of 18.8%[12] - Contract liabilities decreased from $232 million as of December 31, 2024, to $209 million as of March 31, 2025, indicating a reduction of approximately 9.9%[51] - Accounts receivable, net, increased to $81 million as of March 31, 2025, from $79 million as of December 31, 2024, showing a growth of approximately 2.5%[57] Investments and Acquisitions - The company has a controlling interest of 65% in the Lavazza joint venture, which focuses on developing the Lavazza coffee concept in China[18] - The Company completed its investment in a 28% equity interest in Hangzhou Catering, resulting in an approximately 60% equity interest in Hangzhou KFC, consolidating its results from the acquisition date[26] - The Company's investment in Sunner was valued at $220 million as of March 31, 2025, exceeding its interest in Sunner's underlying net assets by $148 million[31] - The Company completed a strategic investment in SnowValley Agricultural Group for a total consideration of $14 million in the first quarter of 2025[36] Revenue Recognition - Revenues from Company-owned restaurants are recognized when a customer takes possession of the food and tenders payment[38] - Franchise fees and income are recognized over the term of the franchise agreement, generally 10 years for KFC and Pizza Hut[41] - The estimated value of loyalty program points earned is recorded as a reduction of revenue at the time the points are earned[47] - Revenue from external customers for the quarter ended March 31, 2025, was $2,981 million, an increase from $2,958 million in the same quarter of 2024, representing a growth of approximately 0.8%[88] Share Repurchases - The company repurchased $173 million worth of common stock during the quarter, compared to $679 million in the same quarter of the previous year, a decrease of 74.6%[11] - The company repurchased 3.6 million shares of common stock for $172 million during the quarter ended March 31, 2025, with approximately $1.1 billion remaining available for future share repurchases[54] Taxation - The income tax provision for the quarter ended March 31, 2025, was $119 million, reflecting an effective tax rate of 27.8%, up from 26.9% in the prior year[80] - The company will monitor the impact of the Corporate Alternative Minimum Tax (CAMT) of 15% on its financial statements[82] - The company has elected to account for Global Intangible Low Taxed Income (GILTI) tax as a period cost as incurred, affecting its annual effective tax rate[81] Lease Obligations - The company leased over 14,000 properties in China, with total lease liabilities amounting to $2,246 million as of March 31, 2025[66] - Operating lease costs for the quarter ended March 31, 2025, were $124 million, compared to $130 million for the same quarter in 2024[66] - The present value of lease liabilities as of March 31, 2025, was $2,246 million, with total undiscounted lease payments of $2,613 million[69] - The weighted-average remaining lease term for operating leases was 6.9 years as of March 31, 2025, down from 7.0 years in the previous year[68] Impairment and Depreciation - The company recorded no restaurant-level impairment for both quarters ended March 31, 2025, and 2024[79] - Impairment charges for the quarter ended March 31, 2025, totaled $6 million, up from $4 million in the same quarter of 2024, marking a 50% increase[89] - The company’s depreciation and amortization expenses for the quarter ended March 31, 2025, were $109 million, down from $117 million in the same quarter of 2024, indicating a decrease of about 6.8%[89] Segment Information - The company has two reportable segments: KFC and Pizza Hut, with other segments combined as All Other Segments due to their insignificance[86] - As of March 31, 2025, Yum China operates 11,943 KFC stores and 3,769 Pizza Hut restaurants in China[17]