yumc-8k_20200729.htm
false 0001673358 0001673358 2020-07-29 2020-07-29 0001673358 dei:OtherAddressMember 2020-07-29 2020-07-29

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 29, 2020

 

Yum China Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

001-37762

 

81-2421743

(State or other jurisdiction of

incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

7100 Corporate Drive

Plano, Texas 75024

United States of America

 

Yum China Building

20 Tian Yao Qiao Road

Shanghai 200030

People’s Republic of China

(Address, including zip code, of principal executive offices)

 

(469) 980-2898

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

YUMC

  New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 


 


 

Item 2.02.

Results of Operations and Financial Condition.

 

On July 29, 2020, Yum China Holdings, Inc. (the “Company”) issued a press release announcing its unaudited results for the second quarter ended June 30, 2020. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

 

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On July 29, 2020, the Company announced that Mr. Johnson Huang, General Manager, KFC, will be taking a medical leave of absence from the Company. During Mr. Huang’s leave of absence, the Company has named Mr. Colin Kwang Chuan Tan, the Company’s current Vice President, KFC Regional Operations, as acting General Manager, KFC, effective July 30, 2020 and until such time as Mr. Huang is able to resume his responsibilities.

 

Mr. Colin Kwang Chuan Tan, age 58, has served as Vice President, KFC Regional Operations, since October 2016, a position he held at the YUM China Division of Yum! Brands, Inc. (“Yum! Restaurants China”) from January 2011 to October 2016. Mr. Tan joined Yum! Restaurants China in 1993 and held various positions in the KFC operation department. He served as Vice President, KFC Operations and Vice President, KFC Field Operations of Yum! Restaurants China from September 2006 to January 2011.

 

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)    Exhibits.

 

The following exhibits are furnished with this report:

 

Exhibit No.

 

Exhibit Description

 

 

 

99.1

 

Press Release of Yum China Holdings, Inc. issued July 29, 2020.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

YUM CHINA HOLDINGS, INC.

 

 

 

 

 

By:

 

/s/ Joseph Chan

 

 

 

 

Name:

 

Joseph Chan

 

 

 

 

Title:

 

Chief Legal Officer

Date: July 29, 2020

 

 

 

 

 

 

 

 

yumc-ex991_6.htm

Exhibit 99.1

Yum China Reports Second Quarter 2020 Results

 

Over 99% of stores are now open

Total Revenues recovered to 89% of prior year. System Sales recovered to 96% of prior year in constant currency

Opened 169 new stores and Reported $128 million Operating Profit despite Unprecedented COVID-19 Impact

 

Shanghai, China (July 29, 2020) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC) today reported unaudited results for the second quarter ended June 30, 2020.

 

Impact of COVID-19 Outbreak and Mitigation Efforts  

 

Second quarter operations improved since the COVID-19 outbreak. More than 99% of stores in China are now open, with sales and profits trending unevenly. Sales improved sequentially in April and May but softened in June. Sales were primarily impacted by significantly reduced traffic at transportation and tourist locations, delayed and shortened school holidays and resurging regional infections. These factors and the lingering effect of COVID-19 continue to impact operations in July.

 

The unevenness in recovery was most pronounced in the differences between regions and trade zones. Eastern China recovered faster than other regions. Northern China’s recovery was notably slower, primarily due to more stringent public health measures. Transportation and tourist locations, which accounted for high single digits of sales, continue to experience significant year over year traffic declines. The pace of recovery also varies across days of the week. Weekdays recovered the fastest as people returned to work and school, followed by weekends, with holidays lagging behind.

 

The Company’s primary focus continues to be safety, efficiency and driving traffic. The Company drove traffic during the second quarter by leveraging its digital and operating capabilities and adapting to changing consumer demand. While dine-in improved when compared to the beginning of the COVID-19 outbreak, delivery and takeaway continued to grow year over year and contributed over half of Company sales in the second quarter. Member sales also grew double digits year over year and exceeded 60% of system sales. Digital ordering grew in popularity, accounting for approximately 80% of Company sales in the quarter.

 

Sales deleveraging and additional costs reduced restaurant margin and operating profit compared to the prior year period. Those negative impacts were partially offset by the realignment of our cost structure and labor productivity improvements. The Company also received one-time relief from landlords and government agencies.

 

Second Quarter Highlights

 

Results for this quarter include the consolidation of the recently acquired Huang Ji Huang operations from the date of the acquisition on April 8, 2020.

 

 

Total revenues declined 11% year over year to $1.90 billion from $2.12 billion (a 7% decline excluding foreign currency translation (“F/X”)).

 

 

Total system sales declined 4% year over year, with declines of 6% at KFC and 12% at Pizza Hut, excluding F/X (7% decline excluding the consolidation of Huang Ji Huang).

 

Same-store sales declined 11% year over year, with a 10% decline at KFC and 12% decline at Pizza Hut, excluding F/X.

 

Opened 169 new stores during the quarter. Including 607 Huang Ji Huang restaurants, total store count reached 9,954.

 

Restaurant margin was 13.7%, compared with 14.7% in the prior year period.

 

Operating Profit declined 38% year over year to $128 million from $204 million (35% decline excluding F/X). Adjusted Operating Profit declined 36% year over year to $132 million from $204 million (33% decline excluding F/X).

 

 

Effective tax rate was 25.2%.

 

Net Income declined 26% to $132 million from $178 million in the prior year period, primarily due to the decline in Operating Profit partially offset by gains from our equity investment in Meituan Dianping (“Meituan”).

 

 

 

Yum China Holdings, Inc. •  Shanghai, China •  Website http://ir.yumchina.com

 


 

 

Adjusted Net Income declined 23% to $136 million from $178 million in the prior year period (35% decline excluding the $31 million and $17 million net gains in the second quarter of 2020 and 2019, respectively, from our equity investment in Meituan, 31% decline if further excluding F/X).

 

 

Diluted EPS declined 26% to $0.34 from $0.46 in the prior year period.

 

 

Adjusted Diluted EPS declined 24% to $0.35 from $0.46 in the prior year period (34% decline excluding the gains from our equity investment in Meituan in 2020 and 2019, 31% decline if further excluding F/X).

 

The Company sold a portion of its equity investment in Meituan during the quarter. The Company currently owns 4.2 million shares of Meituan.

 

Key Financial Results

Second Quarter 2020

 

 

 

Year to Date Ended 6/30/2020

 

 

 

% Change

 

 

 

% Change

 

 

 

System Sales

 

 

Same-Store Sales

 

 

Net New Units

 

 

Operating Profit

 

 

 

System Sales

 

 

Same-Store Sales

 

 

Net New Units

 

 

Operating Profit

 

 

Yum China

 

(4

)

 

 

(11

)

 

 

+14

 

 

 

(38

)

 

 

 

(13

)

 

 

(13

)

 

 

+14

 

 

 

(56)

 

 

   KFC

 

(6

)

 

 

(10

)

 

 

+9

 

 

 

(22

)

 

 

 

(10

)

 

 

(11

)

 

 

+9

 

 

 

(37)

 

 

   Pizza Hut

 

(12

)

 

 

(12

)

 

-

 

 

 

(48

)

 

 

 

(25

)

 

 

(22

)

 

-

 

 

NM

 

 

 

 

Second Quarter

 

 

 

 

Year to Date Ended 6/30

 

 

(in US$ million, except

 

 

 

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

per share data and percentages)

 

2020

 

 

 

2019

 

 

Reported

 

 

Ex F/X

 

 

 

 

2020

 

 

 

2019

 

 

Reported

 

 

Ex F/X

 

 

Operating Profit

$

 

128

 

 

$

 

204

 

 

 

(38

)

 

 

(35

)

 

 

$

 

225

 

 

$

 

507

 

 

 

(56

)

 

 

(54)

 

 

Adjusted Operating Profit1

$

 

132

 

 

$

 

204

 

 

 

(36

)

 

 

(33

)

 

 

$

 

230

 

 

$

 

507

 

 

 

(55

)

 

 

(53)

 

 

Net Income

$

 

132

 

 

$

 

178

 

 

 

(26

)

 

 

(23

)

 

 

$

 

194

 

 

$

 

400

 

 

 

(52

)

 

 

(50)

 

 

Adjusted Net Income1

$

 

136

 

 

$

 

178

 

 

 

(23

)

 

 

(20

)

 

 

$

 

199

 

 

$

 

408

 

 

 

(51

)

 

 

(49)

 

 

Basic Earnings Per Common Share

$

 

0.35

 

 

$

 

0.47

 

 

 

(26

)

 

 

(23

)

 

 

$

 

0.51

 

 

$

 

1.06

 

 

 

(52

)

 

 

(49)

 

 

Adjusted Basic Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

 

0.36

 

 

$

 

0.47

 

 

 

(23

)

 

 

(19

)

 

 

$

 

0.53

 

 

$

 

1.08

 

 

 

(51

)

 

 

(49)

 

 

Diluted Earnings Per Common Share

$

 

0.34

 

 

$

 

0.46

 

 

 

(26

)

 

 

(24

)

 

 

$

 

0.50

 

 

$

 

1.03

 

 

 

(51

)

 

 

(50)

 

 

Adjusted Diluted Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

 

0.35

 

 

$

 

0.46

 

 

 

(24

)

 

 

(20

)

 

 

$

 

0.51

 

 

$

 

1.05

 

 

 

(51

)

 

 

(50)

 

 

1 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.

NM refers to changes over 100%, from negative to positive amounts or from zero to an amount.

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

“I am proud of the results we achieved in Q2. We continue to operate in a tough environment, facing significant headwinds from reduced traffic, particularly at transportation and tourist locations, delayed and shortened school holidays and regional resurgences of COVID-19 infections. Nevertheless, we continued to operate safely, serve our communities and recover sales, and remained profitable,” said Joey Wat, CEO of Yum China. “I take great pride in our employees, who are committed to serving our customers and remained responsive to the circumstances on the ground. Our business model is resilient and adaptable. We quickly adjusted our operations and marketing campaigns to meet evolving consumer preferences and market limitations. Rapid innovation, our leading digital infrastructure and our membership program supported product launches and value offers that were necessary to drive traffic. We protected margins through the flexible cost structure we have developed and optimized over the years. These, along with our other core capabilities such as supply chain and operations, make me confident in our ability to navigate the challenges ahead.”

 

Wat continued, “Seeing this great team in action, I am optimistic about our long-term prospects. Despite the uncertainties brought about by the COVID-19 pandemic, we grew our footprint. And in July, we reached a major milestone of 10,000 stores! Our 2020 target to open 800-850 gross new stores remains unchanged. With our innovation capabilities, strong digital strategy, and resilient business model, I believe we will emerge from this pandemic stronger than ever, and ready to capture the exciting long-term market opportunity in China.”

 

Andy Yeung, CFO of Yum China, added, “Our system sales recovered to 96% of the prior year, or 93% excluding Huang Ji Huang, in constant currency. Same-store sales also improved to 89% of the prior year, 4 percentage points higher than the first quarter. We are especially encouraged by the improvement at Pizza Hut, where same-store sales recovered from 69% in the first quarter to 88% in the second quarter. At Yum China, this is achieved amid ongoing reduced traffic at transportation and tourist locations, delayed and

2


 

shortened school holidays, and resurging regional infections. The recovery is non-linear and uneven with differences across regions and trade zones. These impacts, together with the lingering effects of the COVID-19 outbreak, will continue to put pressure on our sales and operations in the third quarter.

 

Yeung continued, “Our realigned cost structure and productivity improvements helped us achieve a $128 million operating profit and generate strong free cash flow in the quarter. However, with restaurant traffic still below pre-outbreak levels and the global pandemic still evolving, we are prudently managing our financial position. We believe our financial strength enables us to respond to contingencies and invest in our top opportunities in the future.”

 

Dividends and Share Repurchases

 

As announced in the first quarter 2020 earnings release, the Company temporarily suspended its share repurchases and, through the end of the third quarter of 2020, cash dividends on the Company’s common stock.

 

Digital and Delivery

 

As of June 30, 2020, the KFC and Pizza Hut loyalty programs had over 265 million members. During the quarter, member sales represented approximately 65% of KFC’s system sales and 53% of Pizza Hut’s system sales.

 

Delivery contributed to approximately 27% of KFC’s Company sales and 35% of Pizza Hut’s Company sales in the second quarter of 2020, up from approximately 18% and 24% from the prior year period, respectively.

 

Digital orders, including delivery, mobile orders and kiosk orders, accounted for approximately 86% of KFC’s Company sales and 61% of Pizza Hut’s Company sales in the second quarter of 2020, up from approximately 62% and 29% from the prior year period, respectively.

 

New-Unit Development and Asset Upgrade

 

The Company opened 169 new stores in the second quarter 2020, mainly driven by development of the KFC brand.

 

The Company remodeled 310 stores in the second quarter 2020.

 

New Units

 

 

Restaurant Count

 

 

 

 

Second Quarter

 

Year to Date

 

 

As of 6/30

 

 

 

 

2020

 

Ended 6/30/2020

 

 

2020

 

 

2019

 

 

Yum China

 

169

 

348

 

 

 

9,954

 

 

 

8,751

 

 

   KFC

 

142

 

307

 

 

 

6,749

 

 

 

6,179

 

 

   Pizza Hut

 

8

 

19

 

 

 

2,258

 

 

 

2,252

 

 

   Others2

 

19

 

22

 

 

 

947

 

 

 

320

 

 

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

 

Restaurant Margin

Restaurant margin was 13.7% in the second quarter of 2020, compared with 14.7% in the prior-year period, primarily attributable to same-store sales decline and value promotions, combined with wage and commodity inflation, partially offset by improved productivity and relief provided by landlords and government agencies.

Second Quarter

 

 

 

Year to Date Ended 6/30

 

 

 

 

2020

 

 

2019

 

 

ppts change

 

 

 

2020

 

 

2019

 

 

ppts change

 

 

Yum China

 

 

13.7

%

 

 

14.7

%

 

 

(1.0

)

 

 

 

12.2

%

 

 

16.7

%

 

 

(4.5

)

 

   KFC

 

 

14.6

%

 

 

16.1

%

 

 

(1.5

)

 

 

 

14.1

%

 

 

18.1

%

 

 

(4.0

)

 

   Pizza Hut

 

 

11.2

%

 

 

11.3

%

 

 

(0.1

)

 

 

 

6.4

%

 

 

12.9

%

 

 

(6.5

)

 

 

2020 Outlook

The Company is affirming the following fiscal year 2020 targets, subject to revision based on future development of the COVID-19 situation:

 

To open between 800 and 850 new stores (gross), excluding Huang Ji Huang

 

To make capital expenditures between $500 million and $550 million

 

The Company believes that the COVID-19 outbreak will continue to have a material and extended adverse impact on its operational and financial results in 2020. Future operations, as well as the Company’s cash flows and financial position, may be materially and adversely influenced by further developments related to this global outbreak, including potential additional announcements and actions from governments and local authorities, disruption in our supply chain, our inability to provide safety measures to protect our employees, or other reasons. Nevertheless, the Company is well-positioned to capture future growth opportunities through its resilient business model, strong capabilities and dedicated team.

3


 

 

Note on Non-GAAP Adjusted 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.

 

 

Conference Call

Yum China’s management will hold an earnings conference call at 8:00 p.m. U.S. Eastern Time on Wednesday, July 29, 2020 (8:00 a.m. Beijing/Hong Kong Time on Thursday, July 30, 2020).  

 

Operator-assisted conference calls are not available at the moment. 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 registrant ID.

 

Pre-registration Link:http://apac.directeventreg.com/registration/event/7255203

Conference ID:7255203

 

A live webcast of the call may also be accessed at https://edge.media-server.com/mmc/p/ne6pumzr.

 

A replay of the conference call will be available two hours after the call ends until 10:00 a.m. U.S. Eastern Time on Thursday, August 6, 2020 (10:00 p.m. Beijing/Hong Kong Time on Thursday, August 6, 2020) and may be accessed by phone at the following numbers:

 

U.S.:+1 855 452 5696

Mainland China:400 632 2162 or 800 870 0205

Hong Kong:+852 3051 2780

U.K.:+44 20 37014269

International:+61 2 9003 4211

 

Replay access code:7255203

 

Additionally, a live webcast and an archived webcast of this conference call will be available at http://ir.yumchina.com.

 

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 “2020 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” 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, business plans, investment, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, and the expected impact of the COVID-19 outbreak, the anticipated effects of our innovation, digital and delivery capabilities 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 outbreak, 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

4


 

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 Holdings, Inc. is a licensee of Yum! Brands in mainland China. It has exclusive rights in mainland China to KFC, China's leading quick-service restaurant brand, Pizza Hut, the leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving innovative Mexican-inspired food. Yum China also owns the Little Sheep, Huang Ji Huang, East Dawning and COFFii & JOY concepts outright. The Company had 9,954 restaurants in over 1,400 cities and towns at the end of June 2020. Yum China ranked # 361 on the Fortune 500 list for 2020. In 2020, Yum China was named to the Bloomberg Gender-Equality Index and was certified as a Top Employer 2020 in China by the Top Employers Institute, both for the second consecutive year. For more information, please visit http://ir.yumchina.com.

 

Investor Relations Contact:

 

 

Tel: +86 21 2407 7556

IR@YumChina.com  

 

 

 

  

Media Contact:

 

 

Tel: +86 21 2407 7510

Media@YumChina.com

 

 

 

5


 

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

 

 

 

6/30/2020

 

 

6/30/2019

 

 

B/(W)

 

6/30/2020

 

 

6/30/2019

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

1,692

 

 

$

1,926

 

 

 

(12

)

 

 

$

3,240

 

 

$

4,015

 

 

 

(19

)

 

 

Franchise fees and income

 

 

37

 

 

 

36

 

 

 

2

 

 

 

 

72

 

 

 

75

 

 

 

(4

)

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

157

 

 

 

154

 

 

 

1

 

 

 

 

318

 

 

 

324

 

 

 

(2

)

 

 

Other revenues

 

 

16

 

 

 

8

 

 

 

97

 

 

 

 

26

 

 

 

14

 

 

 

86

 

 

 

Total revenues

 

 

1,902

 

 

 

2,124

 

 

 

(11

)

 

 

 

3,656

 

 

 

4,428

 

 

 

(17

)

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

556

 

 

 

607

 

 

 

8

 

 

 

 

1,051

 

 

 

1,245

 

 

 

16

 

 

 

Payroll and employee benefits

 

 

384

 

 

 

450

 

 

 

15

 

 

 

 

778

 

 

 

916

 

 

 

15

 

 

 

Occupancy and other operating expenses

 

 

521

 

 

 

586

 

 

 

11

 

 

 

 

1,015

 

 

 

1,185

 

 

 

14

 

 

 

Company restaurant expenses

 

 

1,461

 

 

 

1,643

 

 

 

11

 

 

 

 

2,844

 

 

 

3,346

 

 

 

15

 

 

 

General and administrative expenses

 

 

113

 

 

 

109

 

 

 

(4

)

 

 

 

212

 

 

 

223

 

 

 

5

 

 

 

Franchise expenses

 

 

16

 

 

 

16

 

 

 

4

 

 

 

 

33

 

 

 

36

 

 

 

8

 

 

 

Expenses for transactions with

   franchisees and unconsolidated affiliates

 

 

160

 

 

 

154

 

 

 

(4

)

 

 

 

316

 

 

 

321

 

 

 

2

 

 

 

Other operating costs and expenses

 

 

13

 

 

 

6

 

 

NM

 

 

 

 

23

 

 

 

11

 

 

NM

 

 

 

Closures and impairment expenses, net

 

 

21

 

 

 

4

 

 

NM

 

 

 

 

29

 

 

 

15

 

 

 

(99

)

 

 

Other income, net

 

 

(10

)

 

 

(12

)

 

 

(15

)

 

 

 

(26

)

 

 

(31

)

 

 

(14

)

 

 

Total costs and expenses, net

 

 

1,774

 

 

 

1,920

 

 

 

8

 

 

 

 

3,431

 

 

 

3,921

 

 

 

13

 

 

 

Operating Profit

 

 

128

 

 

 

204

 

 

 

(38

)

 

 

 

225

 

 

 

507

 

 

 

(56

)

 

 

Interest income, net

 

 

8

 

 

 

10

 

 

 

(8

)

 

 

 

17

 

 

 

19

 

 

 

(8

)

 

 

Investment gain

 

 

45

 

 

 

17

 

 

NM

 

 

 

 

37

 

 

 

27

 

 

 

40

 

 

 

Income Before Income Taxes

 

 

181

 

 

 

231

 

 

 

(22

)

 

 

 

279

 

 

 

553

 

 

 

(49

)

 

 

Income tax provision

 

 

(45

)

 

 

(46

)

 

 

1

 

 

 

 

(77

)

 

 

(139

)

 

 

44

 

 

 

Net income – including noncontrolling interests

 

 

136

 

 

 

185

 

 

 

(27

)

 

 

 

202

 

 

 

414

 

 

 

(51

)

 

 

Net income – noncontrolling interests

 

 

4

 

 

 

7

 

 

 

50

 

 

 

 

8

 

 

 

14

 

 

 

44

 

 

 

Net Income – Yum China Holdings, Inc.

 

$

132

 

 

$

178

 

 

 

(26

)

 

 

$

194

 

 

$

400

 

 

 

(52

)

 

 

Effective tax rate

 

 

25.2

%

 

 

20.0

%

 

 

(5.2

)

ppts.

 

 

27.8

%

 

 

25.2

%

 

 

(2.6

)

ppts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

0.35

 

 

$

0.47

 

 

 

 

 

 

 

$

0.51

 

 

$

1.06

 

 

 

 

 

 

 

Weighted average shares outstanding

    (in millions)

 

 

377

 

 

 

378

 

 

 

 

 

 

 

 

376

 

 

 

378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share

 

$

0.34

 

 

$

0.46

 

 

 

 

 

 

 

$

0.50

 

 

$

1.03

 

 

 

 

 

 

 

Weighted average shares outstanding

    (in millions)

 

 

388

 

 

 

389

 

 

 

 

 

 

 

 

387

 

 

 

389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends Declared Per Common Share

 

$

 

 

$

0.12

 

 

 

 

 

 

 

$

0.12

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Food and paper

 

 

32.9

 

 

 

31.5

 

 

 

(1.4

)

ppts.

 

 

32.4

 

 

 

31.0

 

 

 

(1.4

)

ppts.

 

Payroll and employee benefits

 

 

22.7

 

 

 

23.4

 

 

 

0.7

 

ppts.

 

 

24.0

 

 

 

22.8

 

 

 

(1.2

)

ppts.

 

Occupancy and other operating expenses

 

 

30.7

 

 

 

30.4

 

 

 

(0.3

)

ppts.

 

 

31.4

 

 

 

29.5

 

 

 

(1.9

)

ppts.

 

Restaurant margin

 

 

13.7

%

 

 

14.7

%

 

 

(1.0

)

ppts.

 

 

12.2

%

 

 

16.7

%

 

 

(4.5

)

ppts.

 

Operating margin

 

 

7.5

%

 

 

10.6

%

 

 

(3.1

)

ppts.

 

 

7.0

%

 

 

12.6

%

 

 

(5.6

)

ppts.

 

 

Percentages may not recompute due to rounding.

6


 

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

 

 

 

Quarter Ended

 

 

% Change

 

Year to Date Ended

 

 

% Change

 

 

 

6/30/2020

 

 

6/30/2019

 

 

B/(W)

 

6/30/2020

 

 

6/30/2019

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

1,260

 

 

$

1,410

 

 

 

(11

)

 

 

$

2,480

 

 

$

2,949

 

 

 

(16

)

 

 

Franchise fees and income

 

 

32

 

 

 

33

 

 

 

(5

)

 

 

 

65

 

 

 

69

 

 

 

(7

)

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

15

 

 

 

15

 

 

 

1

 

 

 

 

31

 

 

 

32

 

 

 

(1

)

 

 

Total revenues

 

 

1,307

 

 

 

1,458

 

 

 

(10

)

 

 

 

2,576

 

 

 

3,050

 

 

 

(16

)

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

419

 

 

 

450

 

 

 

7

 

 

 

 

811

 

 

 

926

 

 

 

12

 

 

 

Payroll and employee benefits

 

 

271

 

 

 

311

 

 

 

13