Yum China Reports Third Quarter 2023 Results
10/31/2023 at 4:30 PM EDT

Total Revenues grew 9%, or 15% in constant currency; System Sales grew 15% in constant currency; 
Operating Profit grew 2% to $323 million, or 9% in constant currency, Adjusted Operating Profit of $327 million reached a record;
Record year-to-date store openings of 1,155 net new adds, on track for full-year net new store target

SHANGHAI, Oct. 31, 2023 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the third quarter ended September 30, 2023.

Third Quarter Highlights

  • Total revenues increased 9% year over year to $2.91 billion from $2.68 billion (a 15% increase in constant currency).
  • Total system sales increased 15% year over year, with increases of 15% at KFC and 13% at Pizza Hut in constant currency. Growth was mainly attributable to new unit contribution, same-store sales and lapping of temporary closures in the prior year.
  • Same-store sales increased 4% year over year, with increases of 4% at KFC and 2% at Pizza Hut in constant currency.
  • Opened 500 net new stores during the quarter; total store count reached 14,102, as of September 30, 2023.
  • Operating Profit increased 2% year over year to $323 million from $316 million (a 9% increase in constant currency), primarily driven by sales leveraging.
  • Adjusted Operating Profit increased 3% year over year to $327 million from $318 million (a 10% increase in constant currency).
  • Restaurant margin was 17.0%, compared with 18.8% in the prior year period, mainly due to lapping of austerity measures and temporary relief in the prior year.
  • Effective tax rate was 27.5%.
  • Net Income increased 18% to $244 million from $206 million in the prior year period, primarily due to the increase in Operating Profit and higher interest income.
  • Adjusted Net Income increased 19% to $248 million from $208 million in the prior year period (a 27% increase in constant currency). Adjusted Net Income includes the net losses of $3 million and $12 million in the third quarter of 2023 and 2022, respectively, from the mark-to-market equity investment in Meituan. Excluding such losses, Adjusted Net Income increased 14% year over year (a 21% increase in constant currency).
  • Diluted EPS increased 18% to $0.58 from $0.49 in the prior year period.
  • Adjusted Diluted EPS increased 20% to $0.59 from $0.49 in the prior year period (a 29% increase in constant currency). Excluding the net losses from the mark-to-market equity investments in the third quarter of 2023 and 2022, as aforementioned, Adjusted Diluted EPS increased 15% year over year (a 21% increase in constant currency).

Key Financial Results

 

Third Quarter 2023

   

Year to Date Ended 9/30/2023

 
 

% Change

   

% Change

 
 

System
Sales

 

Same-Store
Sales

 

Net New
Units

 

Operating
Profit

   

System
Sales

 

Same-Store
Sales

 

Net New
Units

 

Operating
Profit

 

Yum China

+15

 

+4

 

+14

 

+2

   

+20

 

+8

 

+14

 

+69

 

   KFC

+15

 

+4

 

+14

 

+4

   

+21

 

+9

 

+14

 

+54

 

   Pizza Hut

+13

 

+2

 

+14

 

(5)

   

+19

 

+7

 

+14

 

+52

 

 

   

Third Quarter

     

Year to Date Ended 9/30

(in US$ million, except

         

% Change

             

% Change

per share data and percentages)

 

2023

   

2022

Reported

 

Ex F/X

     

2023

   

2022

Reported

 

Ex F/X

Operating Profit

$

323

 

$

316

+2

 

+9

   

$

996

 

$

588

+69

 

+79

Adjusted Operating Profit(1)

$

327

 

$

318

+3

 

+10

   

$

1,005

 

$

593

+69

 

+79

Net Income

$

244

 

$

206

+18

 

+26

   

$

730

 

$

389

+88

 

+98

Adjusted Net Income(1)

$

248

 

$

208

+19

 

+27

   

$

739

 

$

394

+88

 

+98

Basic Earnings Per Common Share

$

0.59

 

$

0.49

+20

 

+27

   

$

1.75

 

$

0.92

+90

 

+101

Adjusted Basic Earnings
  Per Common Share(1)

$

0.60

 

$

0.49

+22

 

+27

   

$

1.77

 

$

0.93

+90

 

+101

Diluted Earnings Per Common Share

$

0.58

 

$

0.49

+18

 

+27

   

$

1.73

 

$

0.92

+88

 

+99

Adjusted Diluted Earnings
  Per Common Share(1)

$

0.59

 

$

0.49

+20

 

+29

   

$

1.75

 

$

0.93

+88

 

+99

See "Reconciliation of Reported GAAP Results to non-GAAP Adjusted Measures" included in the accompanying tables of this release for further details.

Note:  All comparisons are versus the same period a year ago.

Percentages may not recompute due to rounding.

System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures are normalized in the same-store sales calculation by excluding the period during which stores are temporarily closed.

CEO and CFO Comments 

Joey Wat, CEO of Yum China, commented, "We delivered a record third quarter in total revenues, adjusted operating profit and net new store openings. System sales grew 15% and adjusted operating profit excluding temporary reliefs grew 21% in constant currency. For the first nine months of the year, operating profit and adjusted operating profit also set new records, reaching around $1 billion. Our robust supply chain, industry-leading digital ecosystem and strong innovation capabilities have enabled us to stay agile in evolving market conditions. We continued to enrich our core menu offerings and launch targeted, engaging campaigns to drive incremental traffic. Beef burger and whole chicken categories combined make up more than 6% of KFC's sales mix, exceeding that of the Original Recipe Chicken. KFC's collaboration with Honkai: Star Rail, a popular e-game, broadened our customer reach and grew our membership base. Furthermore, we are expanding our price range to appeal to a broader customer base, tapping into underserved consumers. At Pizza Hut, we continue to expand pizza selections priced below RMB 50, to capture this very significant segment of the overall pizza market. At KFC, our offers range from premium products such as Ultra Cheese 2.0 Beef Burger to RMB 19.9 3-item value combos to address diverse customer preferences." 

"We accelerated new store openings in the quarter, adding 500 net new stores. With 1,155 net new stores in the first three quarters of this year, we are on track to meet our updated full-year target of 1,400 to 1,600. Importantly, our new store payback periods and unit economics remain healthy. At our Investor Day in September, we shared our views on the vast, untapped potential that China continues to offer, even with moderate economic growth. With our "RGM 2.0" strategy, we are focusing on growth while reinforcing resilience and widening our strategic moats. We have set a clear roadmap and growth targets for 2024 to 2026. These include 20,000 stores by 2026 and a return of $3 billion to shareholders through cash dividends and share repurchases during the same three-year period. We are confident in our capabilities to capture growth opportunities," Wat concluded.

Andy Yeung, CFO of Yum China, added, "In the third quarter, we achieved robust results despite macroeconomic headwinds. Same-store sales growth was solid on a year-over-year basis, and maintained at approximately 90% of the 2019 level in the quarter. But we observed softening consumer demand emerged in late September through October. Looking ahead, the fourth quarter is a seasonally small quarter in terms of sales and profits; hence small fluctuations in sales could have a more pronounced impact on our margins. It is important to highlight that during the fourth quarter last year, we received temporary relief of $26 million, which is not expected to repeat this year. Last year, we also experienced staffing shortages due to widespread COVID infections. This year, we are returning to more normalized operations and staffing levels at our restaurants. The post-pandemic economic recovery is shaping up to be a "wave-like" and "non-linear" process. So, we will continue to stay agile and take actions to drive sales and cost-efficiency in these evolving market conditions. However, the overall trend towards recovery is evident this year, and many of our performance metrics are setting new records.  We remain excited about the significant opportunities China presents and confident in delivering sustainable growth and long-term value to our shareholders. We are proud to report that we returned $211 million to shareholders in the third quarter, through cash dividends and share repurchases, and are on track to return $600 to 800 million for the full year."

Share Repurchases and Dividends

  • During the third quarter, the Company repurchased approximately 2.9 million shares of Yum China common stock for $157 million at an average price of $54.91 per share. As of September 30, 2023, approximately $870 million remained available for future share repurchases under the current authorization.
  • The Board declared a cash dividend of $0.13 per share on Yum China's common stock, payable on December 19, 2023 to shareholders of record as of the close of business on November 28, 2023.

Digital and Delivery

  • KFC and Pizza Hut loyalty programs exceeded 460 million members combined, as of quarter-end. Member sales accounted for approximately 65% of system sales in the third quarter of 2023.
  • Delivery contributed approximately 35% of KFC and Pizza Hut's Company sales in the third quarter of 2023, a decrease of 3% compared with the prior year period.
  • Digital orders, including delivery, mobile orders and kiosk orders, accounted for approximately 89% of KFC and Pizza Hut's Company sales in the third quarter of 2023.

KFC and Pizza Hut Total

 

Third Quarter

   

Year to Date Ended 9/30

 
   

2023

 

2022

   

2023

 

2022

 

        Member count (as of period-end)

 

460 million+

 

400 million+

   

460 million+

 

400 million+

 

        Member sales as % of system sales

 

~65%

 

~62%

   

~65%

 

~62%

 

        Delivery as % of Company sales

 

~35%

 

~38%

   

~36%

 

~37%

 

        Digital orders as % of Company sales

 

~89%

 

~91%

   

~89%

 

~89%

 

New-Unit Development and Asset Upgrade

  • The Company opened 500 net new stores in the third quarter of 2023, mainly driven by development of the KFC and Pizza Hut brands.
  • The Company remodeled 194 stores in the third quarter of 2023.
   

Net New Units

   

Restaurant Count

 
   

Third Quarter

 

Year to Date

   

As of September 30

 
   

2023

 

Ended 9/30/2023

   

2023

 

2022

 

Yum China

 

500

 

1,155

   

14,102

 

12,409

 

   KFC

 

355

 

823

   

9,917

 

8,675

 

   Pizza Hut

 

130

 

299

   

3,202

 

2,806

 

   Others(2)

 

15

 

33

   

983

 

928

 

2 Others include Taco Bell, Lavazza, Little Sheep, Huang Ji Huang, and for 2022, COFFii & JOY.

Restaurant Margin

  • Restaurant margin was 17.0% in the third quarter of 2023 compared with 18.8% in the prior year period, driven primarily by lapping of the austerity measures and temporary relief in the prior year, higher promotion costs and wage inflation, partially offset by sales leveraging and favorable commodity prices.
 

Third Quarter

   

Year to Date Ended 9/30

 
   

2023

 

2022

 

ppts change

   

2023

 

2022

 

ppts change

 

Yum China

 

17.0 %

 

18.8 %

 

(1.8)

   

17.9 %

 

15.1 %

 

+2.8

 

   KFC

 

18.6 %

 

20.6 %

 

(2.0)

   

19.4 %

 

16.6 %

 

+2.8

 

   Pizza Hut

 

12.7 %

 

13.4 %

 

(0.7)

   

13.1 %

 

11.1 %

 

+2.0

 

2023 Outlook

The Company's fiscal year 2023 targets were updated at Investor Day on September 14, 2023:

  • To open approximately 1,400 to 1,600 net new stores, an increase of 300 stores from the previous target.
  • To make capital expenditures in the range of approximately $700 million to $900 million, unchanged from the previous target.

Company Updates

  • On September 14, 2023, the Company announced the following financial and operating targets at its Investor Day.
    • To reach total count of 20,000 stores by 2026.
    • To achieve high-single-to-double-digit CAGR for system sales and operating profit, and double-digit EPS CAGR from 2024 to 2026, compared to base year 2023 and in constant currency.
    • To return approximately $3 billion to shareholders through quarterly dividends and share repurchases from 2024 to 2026.
  • On September 27, 2023, the Company was named to Fortune's 2023 Change the World list, an annual list that recognizes a select group of companies that have had a positive social impact through activities that are part of their core business strategy. Yum China was one of 59 companies worldwide – and the only restaurant company – selected for the recognition.

Note on Non-GAAP Measures

Reported GAAP results include Special Items, which are excluded from non-GAAP adjusted measures. Special Items are not allocated to any segment and therefore only impact reported GAAP results of Yum China. See "Reconciliation of Reported GAAP Results to Non-GAAP Adjusted Measures" within this release. In addition, for the non-GAAP measures of Restaurant profit and Restaurant margin, see "Reconciliation of GAAP Operating Profit to Restaurant Profit" under "Segment Results" within this release.

Other Information

In this release, the Company has also disclosed the change in adjusted operating profit excluding temporary relief. This temporary relief was provided by landlords and government agencies, and consisted of $1 million in the third quarter of 2023 and $30 million in the third quarter of 2022. The temporary relief received primarily related to the COVID-19 pandemic, and is not expected to recur. The Company believes this information is useful to investors because it facilitates greater comparability between periods.

Conference Call

Yum China's management will hold an earnings conference call at 8:00 p.m. U.S. Eastern Time on Tuesday, October 31, 2023 (8:00 a.m. Beijing/Hong Kong Time on Wednesday, November 1, 2023).  

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/bpvn2yvj.

To join by phone, please register in advance of the conference through the link provided below. Upon registering, you will be provided with participant dial-in numbers, a passcode and a unique access PIN.

Pre-registration link: https://s1.c-conf.com/diamondpass/10033304-ahyd6f.html

A replay of the conference call will be available one hour after the call ends until Wednesday, November 8, 2023 and may be accessed by phone using the following numbers:

U.S.:

1 855 883 1031

Mainland China:

400 1209 216

Hong Kong:

800 930 639

U.K.:

0800 031 4295

   

Replay access code:

10033304

 

Additionally, this earnings release, the accompanying slides, as well as the live and archived webcast of this conference call will be available at Yum China's Investor Relations website at http://ir.yumchina.com

For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including under "2023 Outlook." We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investment, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, pace of recovery of Yum China's business, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, including the COVID-19 pandemic, our ability to control costs and expenses, including tax costs, as well as changes in political, economic and regulatory conditions in China. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company has over 400,000 employees and operates over 14,000 restaurants under six brands across 1,900 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. Taco Bell offers innovative Mexican-inspired food. Yum China has also partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Yum China has a world-class, digitalized supply chain which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com

Investor Relations Contact:

   

Tel: +86 21 2407 7556 / +852 2267 5801

IR@YumChina.com

 

     

Media Contact:

   

Tel: +86 21 2407 7510

Media@YumChina.com

 

Yum China Holdings, Inc.

Condensed Consolidated Statements of Income

(in US$ million, except per share data)

(unaudited)

 
   

Quarter Ended

   

% Change

 

Year to Date Ended

   

% Change

   

9/30/2023

   

9/30/2022

   

B/(W)

 

9/30/2023

   

9/30/2022

   

B/(W)

Revenues

                                       

Company sales

 

$

2,759

   

$

2,561

     

8

     

$

8,048

   

$

7,135

     

13

   

Franchise fees and income

   

23

     

22

     

7

       

69

     

65

     

8

   

Revenues from transactions with franchisees

   

100

     

80

     

25

       

282

     

219

     

29

   

Other revenues

   

32

     

22

     

41

       

86

     

62

     

39

   

Total revenues

   

2,914

     

2,685

     

9

       

8,485

     

7,481

     

13

   

Costs and Expenses, Net

                                       

Company restaurants

                                       

Food and paper

   

858

     

787

     

(9)

       

2,466

     

2,206

     

(12)

   

Payroll and employee benefits

   

699

     

603

     

(16)

       

2,047

     

1,819

     

(12)

   

Occupancy and other operating expenses

   

732

     

691

     

(6)

       

2,098

     

2,034

     

(3)

   

Company restaurant expenses

   

2,289

     

2,081

     

(10)

       

6,611

     

6,059

     

(9)

   

General and administrative expenses

   

169

     

157

     

(8)

       

485

     

449

     

(8)

   

Franchise expenses

   

9

     

9

     

2

       

28

     

27

     

   

Expenses for transactions with franchisees

   

95

     

76

     

(24)

       

270

     

212

     

(28)

   

Other operating costs and expenses

   

29

     

18

     

(62)

       

77

     

53

     

(45)

   

Closures and impairment expenses, net

   

     

4

   

NM

       

17

     

20

     

15

   

Other expenses, net

   

     

24

     

100

       

1

     

73

     

98

   

Total costs and expenses, net

   

2,591

     

2,369

     

(9)

       

7,489

     

6,893

     

(9)

   

Operating Profit

   

323

     

316

     

2

       

996

     

588

     

69

   

Interest income, net

   

46

     

25

     

86

       

124

     

51

     

145

   

Investment loss

   

(4)

     

(15)

     

75

       

(32)

     

(32)

     

(1)

   

Income Before Income Taxes and
  Equity in Net Earnings (Losses) from
  Equity Method Investments

   

365

     

326

     

12

       

1,088

     

607

     

79

   

Income tax provision

   

(100)

     

(97)

     

(3)

       

(296)

     

(183)

     

(62)

   

Equity in net earnings (losses) from
   equity method investments

   

2

     

(2)

   

NM

       

2

     

(4)

   

NM

   

Net income – including noncontrolling interests

   

267

     

227

     

18

       

794

     

420

     

89

   

Net income – noncontrolling interests

   

23

     

21

     

(14)

       

64

     

31

     

(110)

   

Net Income – Yum China Holdings, Inc.

 

$

244

   

$

206

     

18

     

$

730

   

$

389

     

88

   

Effective tax rate

   

27.5

%

   

29.9

%

   

2.4

 

ppts.

   

27.2

%

   

30.1

%

   

2.9

 

ppts.

                                         

Basic Earnings Per Common Share

 

$

0.59

   

$

0.49

           

$

1.75

   

$

0.92

         

Weighted-average shares outstanding
    (in millions)

   

416

     

420

             

417

     

422

         
                                         

Diluted Earnings Per Common Share

 

$

0.58

   

$

0.49

           

$

1.73

   

$

0.92

         

Weighted-average shares outstanding
    (in millions)

   

420

     

424

             

421

     

426

         
                                         

Company sales

   

100.0

%

   

100.0

%

           

100.0

%

   

100.0

%

       

Food and paper

   

31.1

     

30.7

     

(0.4)

 

ppts.

   

30.6

     

30.9

     

0.3

 

ppts.

Payroll and employee benefits

   

25.3

     

23.5

     

(1.8)

 

ppts.

   

25.4

     

25.5

     

0.1

 

ppts.

Occupancy and other operating expenses

   

26.6

     

27.0

     

0.4

 

ppts.

   

26.1

     

28.5

     

2.4

 

ppts.

Restaurant margin

   

17.0

%

   

18.8

%

   

(1.8)

 

ppts.

   

17.9

%

   

15.1

%

   

2.8

 

ppts.

Operating margin

   

11.7

%

   

12.3

%

   

(0.6)

 

ppts.

   

12.4

%

   

8.2

%

   

4.2

 

ppts.

Percentages may not recompute due to rounding. NM refers to not meaningful.

 

 

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

 
   

Quarter Ended

   

% Change

 

Year to Date Ended

   

% Change

   

9/30/2023

   

9/30/2022

   

B/(W)

 

9/30/2023

   

9/30/2022

   

B/(W)

Revenues

                                       

Company sales

 

$

2,154

   

$

1,992

     

8

     

$

6,274

   

$

5,554

     

13

   

Franchise fees and income

   

16

     

15

     

6

       

48

     

44

     

9

   

Revenues from transactions with franchisees

   

12

     

9

     

40

       

33

     

24

     

38

   

Other revenues

   

4

     

1

     

152

       

13

     

6

     

114

   

Total revenues

   

2,186

     

2,017

     

8

       

6,368

     

5,628

     

13

   

Costs and Expenses, Net

                                       

Company restaurants

                                       

Food and paper

   

666

     

607

     

(10)

       

1,914

     

1,712

     

(12)

   

Payroll and employee benefits

   

528

     

449

     

(18)

       

1,538

     

1,363

     

(13)

   

Occupancy and other operating expenses

   

560

     

526

     

(6)

       

1,603

     

1,557

     

(3)

   

Company restaurant expenses

   

1,754

     

1,582

     

(11)

       

5,055

     

4,632

     

(9)

   

General and administrative expenses

   

68

     

63

     

(10)

       

203

     

191

     

(7)

   

Franchise expenses

   

8

     

8

     

2

       

24

     

23

     

   

Expenses for transactions with franchisees

   

11

     

8

     

(35)

       

29

     

22

     

(33)

   

Other operating costs and expenses

   

3

     

1

     

(201)

       

11

     

4

     

(159)

   

Closures and impairment expenses, net

   

     

3

     

99

       

9

     

11

     

18

   

Other expenses, net

   

     

24

     

100

       

2

     

75

     

97

   

Total costs and expenses, net

   

1,844

     

1,689

     

(9)

       

5,333

     

4,958

     

(8)

   

Operating Profit

 

$

342

   

$

328

     

4

     

$

1,035

   

$

670

     

54

   

Company sales

   

100.0

%

   

100.0

%

           

100.0

%

   

100.0

%

       

Food and paper

   

30.9

     

30.5

     

(0.4)

 

ppts.

   

30.5

     

30.8

     

0.3

 

ppts.

Payroll and employee benefits

   

24.5

     

22.5

     

(2.0)

 

ppts.

   

24.5

     

24.5

     

 

ppts.

Occupancy and other operating expenses

   

26.0

     

26.4

     

0.4

 

ppts.

   

25.6

     

28.1

     

2.5

 

ppts.

Restaurant margin

   

18.6

%

   

20.6

%

   

(2.0)

 

ppts.

   

19.4

%

   

16.6

%

   

2.8

 

ppts.

Operating margin

   

15.8

%

   

16.5

%

   

(0.7)

 

ppts.

   

16.5

%

   

12.1

%

   

4.4

 

ppts.

Percentages may not recompute due to rounding.

 

 

Yum China Holdings, Inc.

Pizza Hut Operating Results

(in US$ million)

(unaudited)

 
   

Quarter Ended

   

% Change

 

Year to Date Ended

   

% Change

   

9/30/2023

   

9/30/2022

   

B/(W)

 

9/30/2023

   

9/30/2022

   

B/(W)

Revenues

                                       

Company sales

 

$

591

   

$

556

     

6

     

$

1,728

   

$

1,541

     

12

   

Franchise fees and income

   

2

     

2

     

15

       

6

     

6

     

5

   

Revenues from transactions with franchisees

   

1

     

1

     

11

       

3

     

3

     

11

   

Other revenues

   

5

     

2

     

126

       

13

     

6

     

132

   

Total revenues

   

599

     

561

     

7

       

1,750

     

1,556

     

13

   

Costs and Expenses, Net

                                       

Company restaurants

                                       

Food and paper

   

187

     

176

     

(7)

       

537

     

481

     

(12)

   

Payroll and employee benefits

   

167

     

149

     

(11)

       

496

     

437

     

(13)

   

Occupancy and other operating expenses

   

162

     

156

     

(4)

       

469

     

452

     

(4)

   

Company restaurant expenses

   

516

     

481

     

(7)

       

1,502

     

1,370

     

(10)

   

General and administrative expenses

   

30

     

27

     

(13)

       

89

     

84

     

(6)

   

Franchise expenses

   

1

     

1

     

(13)

       

3

     

3

     

(7)

   

Expenses for transactions with franchisees

   

1

     

1

     

(12)

       

3

     

3

     

(11)

   

Other operating costs and expenses

   

4

     

2

     

(127)

       

11

     

5

     

(129)

   

Closures and impairment expenses, net

   

     

     

19

       

5

     

1

   

NM

   

Total costs and expenses, net

   

552

     

512

     

(8)

       

1,613

     

1,466

     

(10)

   

Operating Profit

 

$

47

   

$

49

     

(5)

     

$

137

   

$

90

     

52

   

Company sales

   

100.0

%

   

100.0

%

           

100.0

%

   

100.0

%

       

Food and paper

   

31.7

     

31.6

     

(0.1)

 

ppts.

   

31.1

     

31.2

     

0.1

 

ppts.

Payroll and employee benefits

   

28.1

     

26.9

     

(1.2)

 

ppts.

   

28.7

     

28.4

     

(0.3)

 

ppts.

Occupancy and other operating expenses

   

27.5

     

28.1

     

0.6

 

ppts.

   

27.1

     

29.3

     

2.2

 

ppts.

Restaurant margin

   

12.7

%

   

13.4

%

   

(0.7)

 

ppts.

   

13.1

%

   

11.1

%

   

2.0

 

ppts.

Operating margin

   

7.9

%

   

8.8

%

   

(0.9)

 

ppts.

   

7.9

%

   

5.9

%

   

2.0

 

ppts.

Percentages may not recompute due to rounding. NM refers to not meaningful.

 

 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(in US$ million)

 
   

9/30/2023

   

12/31/2022

 
   

(Unaudited)

       

ASSETS

           

Current Assets

           

Cash and cash equivalents

 

$

1,131

   

$

1,130

 

Short-term investments

   

2,001

     

2,022

 

Accounts receivable, net

   

62

     

64

 

Inventories, net

   

419

     

417

 

Prepaid expenses and other current assets

   

310

     

307

 

Total Current Assets

   

3,923

     

3,940

 

Property, plant and equipment, net

   

2,117

     

2,118

 

Operating lease right-of-use assets

   

2,083

     

2,219

 

Goodwill

   

1,879

     

1,988

 

Intangible assets, net

   

147

     

159

 

Long-term bank deposits and notes

   

1,237

     

680

 

Equity investments

   

319

     

361

 

Deferred income tax assets

   

106

     

113

 

Other assets

   

259

     

248

 

Total Assets

   

12,070

     

11,826

 
             

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

           

Current Liabilities

           

Accounts payable and other current liabilities

   

2,129

     

2,096

 

Short-term borrowings

   

210