Financial Performance - Total revenue for Q2 2022 was $2,128 million, a decrease of 13.2% compared to $2,451 million in Q2 2021[2] - Net profit for Q2 2022 was $83 million, down from $193 million in Q2 2021, representing a decline of 57.0%[3] - The basic earnings per share for Q2 2022 was $0.20, compared to $0.43 in Q2 2021, reflecting a decrease of 53.5%[2] - The company reported a net income of $193 million for the first half of 2022, compared to $436 million in the same period of 2021, indicating a decline of 55.7%[3] - The company’s total revenue for the six months ended June 30, 2022, was $5,034 million, with KFC generating $3,611 million and Pizza Hut $995 million[31] - The company reported a net profit of $83 million for the quarter ending March 31, 2022, compared to a net profit of $181 million for the same quarter in 2021[40] - The company’s total income for the first half of 2022 was $995 million, down from $1,079 million in the same period of 2021, reflecting an 8% decline[123] - The company’s net profit for the six months ending June 30, 2022, was $272 million, down from $575 million for the same period in 2021[42] Revenue Sources - Company restaurant revenue for the first half of 2022 was $4,574 million, slightly up from $4,564 million in the same period of 2021[2] - KFC and Pizza Hut generated total restaurant revenue of $2,026 million for the quarter ended June 30, 2022, with KFC contributing $1,571 million and Pizza Hut $443 million[29] - Franchise fee income amounted to $19 million, including $13 million from KFC and $2 million from Pizza Hut, for the same quarter[29] - The company’s revenue from transactions with franchisees and joint ventures reached $62 million, primarily from food and packaging sales[26] - The company’s other income for the quarter was $133 million, with significant contributions from various service offerings[29] Costs and Expenses - Total costs and expenses for Q2 2022 were $2,047 million, down from $2,218 million in Q2 2021, a reduction of 7.7%[2] - The operating profit for the second quarter of 2022 was $81 million, a decrease from $233 million in the same quarter of 2021, primarily due to the impact of COVID-19[42] - The company reported a restaurant-level impairment of $15 million for the quarter ended June 30, 2022, compared to $13 million for the same period in 2021[74] - The company experienced a 4% increase in labor costs and a rise in utility rates, contributing to the decrease in restaurant profit[119] - Management expenses increased to $63 million for the quarter ended June 30, 2022, up 7% from $58 million in the same quarter of 2021[116] Assets and Liabilities - Total assets as of June 30, 2022, amounted to $12,054 million, a decrease from $13,223 million at the end of 2021[6] - Total liabilities decreased to $4,752 million from $5,301 million at the end of 2021, reflecting a reduction of 10.4%[6] - Cash and cash equivalents at the end of the period were $1,147 million, slightly up from $1,136 million at the beginning of the period[6] - The total equity attributable to shareholders decreased to $6,529 million from $7,056 million, a decline of 7.4%[6] - The company’s total current liabilities were $2,099 million as of June 30, 2022, compared to $2,332 million as of December 31, 2021, marking a decrease of about 10.0%[53] Investments and Acquisitions - The company is exploring potential acquisitions to strengthen its market position and expand its footprint[1] - The company invested $255 million in Q4 2021 for a 28% stake in Hangzhou Catering Group, increasing its ownership in the Hangzhou KFC joint venture to approximately 60%[9] - The company acquired a 5% stake in Shengnong for approximately $261 million, making Shengnong the largest poultry supplier[17] - The company reported unrealized gains of $20 million and losses of $18 million from its investment in Meituan as of June 30, 2022[20] - The company completed an investment of $255 million in Hangzhou Yingfu, acquiring a 28% stake, which resulted in a total ownership of approximately 60% in Hangzhou KFC[15] Market and Operational Challenges - In Q2 2022, same-store sales decreased by over 20% year-on-year due to the severe impact of COVID-19, with an average of over 2,500 restaurants temporarily closed in April and May[103] - The company expects that the future development of the COVID-19 pandemic may continue to have a significant and lasting adverse impact on its operational performance, cash flow, and financial condition[144] - The company anticipates challenges related to its growth strategies for Lavazza and COFFii& JOY, which may not yield the expected benefits[166] - The company is subject to ongoing tax audits by various tax authorities, which may impact its financial position and operating results[76] - The company is exposed to fluctuations in raw material prices, which could adversely impact its financial condition and operating results[165] Shareholder Returns - The company declared a cash dividend of $0.12 per share for the quarter ending March 31, 2022, totaling $50 million[39] - The company repurchased $400 million worth of shares or 9 million common shares under its buyback plan during the first half of 2022[156] - The board has authorized a total share repurchase plan of $2.4 billion, with no expiration date for the authorization[186] - The estimated dollar value of shares yet to be repurchased under the plan is approximately $1.2 billion[186] - The company’s ability to pay dividends may be restricted by applicable Chinese laws regarding distributable profits[157] Strategic Initiatives - The company plans to continue investing in technology and innovation to enhance customer experience and operational efficiency[1] - The company aims to expand the Taco Bell network to at least 100 stores by the end of 2022 and to at least 225 stores by the end of 2025, supported by capital from Yum[97] - The company is currently evaluating the impact of new accounting standards effective from January 1, 2023, on its financial statements[161][162][163] - The company plans to invest in digitalization, automation, and logistics infrastructure as part of its future capital expenditures[154] - The company aims to expand its business footprint in existing and new cities, believing there is significant growth potential in the Chinese market[103]
百胜中国(09987) - 2022 - 中期财报