Yum China Reports Fourth Quarter Results, Increases Dividend by 23% and Steps Up 2024 Share Repurchases to $1.25 billion

Core Insights - Yum China reported a strong performance in 2023, with total revenues reaching $11 billion and adjusted operating profit of $1.1 billion, marking significant growth compared to the previous year [1][3][5]. Fourth Quarter Highlights - Total system sales increased by 21% year-over-year, driven by a 12% contribution from net new units and a 4% growth in same-store sales [2][6]. - The company opened 542 net new stores in Q4, bringing the total store count to 14,644, with KFC at 10,296 stores and Pizza Hut at 3,312 stores [2][3]. - Total revenues for Q4 rose by 19% to $2.49 billion, while operating profit surged by 170% to $110 million [2][6]. - Core operating profit grew by 324%, and diluted EPS increased by 77% to $0.23 [2][6]. Full Year Highlights - For the full year, total system sales grew by 21%, with a 9% contribution from net new units and a 7% increase in same-store sales [3][6]. - Total revenues increased by 15% to $10.98 billion, and operating profit grew by 76% to $1.1 billion [3][6]. - Digital sales exceeded $9.2 billion, accounting for approximately 89% of total company sales, with total membership for KFC and Pizza Hut exceeding 470 million [3][5]. Shareholder Returns - Yum China returned approximately $833 million to shareholders in 2023 through share repurchases and cash dividends, marking the highest full-year return in the company's history [5][6]. - The board declared a 23% increase in cash dividends to $0.16 per share, payable on March 26, 2024 [5][6]. Strategic Outlook - The company plans to open approximately 1,500 to 1,700 net new stores in 2024 and aims to reach a total store count of 20,000 by 2026 [10][11]. - Yum China targets a high-single-to-double-digit CAGR for system sales and operating profit from 2024 to 2026, using 2023 as the base year [10][11]. Operational Performance - KFC's system sales grew by 20% for both the quarter and the year, with a record 1,202 net new stores opened in 2023 [8][9]. - Pizza Hut's system sales increased by 24% for the quarter and 20% for the year, with a record 409 net new stores opened [9][10]. Recognition and Sustainability - Yum China was ranked number one globally in the Restaurant & Leisure Facilities Industry in the S&P Global 2023 Corporate Sustainability Assessment [11]. - The company has been recognized as a Top Employer in China for six consecutive years and was included in the Fortune World's Most Admired Companies list for 2024 [11].