yumc-8k_20211027.htm
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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): October 27, 2021

 

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

9987

The Stock Exchange of Hong Kong Limited

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 October 27, 2021, Yum China Holdings, Inc. issued a press release announcing its unaudited results for the third quarter ended September 30, 2021. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

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 October 27, 2021.

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: October 27, 2021

 

 

 

 

 

 

 

 

yumc-ex991_6.htm

Exhibit 99.1

Yum China Reports Third Quarter 2021 Results

 

Total Revenues grew 9%. System Sales grew 1% in constant currency

Opened a record of 524 new stores

Reported $178 million Operating Profit despite Delta variant outbreak, demonstrating resiliency and agility

 

Shanghai, China (October 27, 2021) – 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, 2021.

 

Impact of COVID-19 Outbreak and Mitigation Efforts  

 

As we described in the business update released on September 14, 2021, third quarter results were significantly impacted by the Delta variant outbreak that started in late July. This regional outbreak was the most widely spread wave since the first quarter of 2020. Several major cities were locked down, including Nanjing and Yangzhou, which are key cities for us in eastern China. Zhengzhou and Wuhan, the capital cities of Henan and Hubei provinces, respectively, were also significantly affected. In mid-September, there were also smaller regional outbreaks in Fujian and Heilongjiang provinces, in southeastern and northeastern China, respectively. Strict public health measures were implemented across the country, including the closure of many tourist locations. These actions led to fewer social activities, substantially lower travel volume, and cancelled holiday trips. According to government statistics, the restaurant industry in China was considerably impacted in August with a revenue decline of approximately 10% compared to August 2019. Despite a mild recovery, the restaurant industry’s revenue growth of approximately 2% in September compared to 2019 was the slowest since March 2021.

 

Going into the fourth quarter, strict public health measures remain in effect nationwide. The effects of COVID-19 persist, such as fewer social activities, cautious consumer spending and subdued travel volume. According to government statistics, for the seven-day National Day holiday that started on October 1, the number of travelers was down 2% compared to the same period last year and down 30% versus the corresponding period in 2019. Related travel spending was down 5% compared to 2020 and 40% compared to 2019. With latest regional outbreaks resurging across 12 provinces and rigorous preventative health measures in force across the country, we continue to expect same-store sales recovery to take time. Same-store sales are gradually recovering but remain below the prior year and pre-COVID 2019 levels, since overall dine-in volume as well as traffic at transportation hubs are still significantly impacted. We are focused on driving sales by leveraging our member base and digital channels, launching great food for both dine-in and home consumption and enhancing our hybrid delivery model.

 

Third Quarter Highlights

 

Total revenues increased 9% year over year to $2.55 billion from $2.35 billion (a 2% increase excluding foreign currency translation (“F/X”)).

 

Total system sales increased 1% year over year, with increases of 1% at both KFC and Pizza Hut, excluding F/X.

 

Same-store sales decreased 7 % year over year, with decreases of 8% at KFC and 5% at Pizza Hut, excluding F/X.

 

Opened 524 new stores during the quarter.

 

Total store count reached 11,415 as of September 30, 2021, an increase of 1,265 stores over the past year.

 

Restaurant margin was 12.2%, compared with 18.6% in the prior year period, primarily due to sales deleveraging.

 

Operating Profit decreased 68% year over year to $178 million from $556 million (a 70% decrease excluding F/X), primarily due to sales deleveraging and lapping the non-cash gain of $239 million from the re-measurement of our previously held equity interest in Suzhou KFC in the third quarter 2020.

 

Adjusted Operating Profit decreased 48% year over year to $168 million from $320 million (a 52% decrease excluding F/X).

 

Effective tax rate was 28.3%.

 

Net Income decreased 76% to $104 million from $439 million in the prior year period, primarily due to the decrease in Operating Profit and loss from our mark-to-market investment in Meituan.

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

 


 

 

Adjusted Net Income decreased 63% to $96 million from $263 million in the prior year period (a 45% decrease excluding the net loss of $32 million in the third quarter of 2021 and the net gain of $29 million in the third quarter of 2020, respectively, from our mark-to-market equity investment in Meituan; a 50% decrease if further excluding F/X).

 

Diluted EPS decreased 78% to $0.24 from $1.10 in the prior year period.

 

Adjusted Diluted EPS decreased 67% to $0.22 from $0.66 in the prior year period (a 50% decrease excluding the net loss in the third quarter of 2021 and the net gain in the third quarter of 2020, respectively, from our mark-to-market investment; a 53% decrease if further excluding F/X).

 

Results include the consolidation of Huang Ji Huang since April 2020, and Suzhou KFC since August 2020.

 

Key Financial Results

 

 

Third Quarter 2021

 

 

 

Year to Date Ended 9/30/2021

 

 

 

% Change

 

 

 

% Change

 

 

 

System Sales

 

 

Same-Store Sales

 

 

Net New Units

 

 

Operating Profit

 

 

 

System Sales

 

 

Same-Store Sales

 

 

Net New Units

 

 

Operating Profit

 

 

Yum China

 

+1

 

 

 

(7

)

 

 

+12

 

 

 

(68

)

 

 

 

+15

 

 

 

+2

 

 

 

+12

 

 

 

(4

)

 

        KFC

 

+1

 

 

 

(8

)

 

 

+14

 

 

 

(31

)

 

 

 

+12

 

 

-

 

 

 

+14

 

 

 

+27

 

 

        Pizza Hut

 

+1

 

 

 

(5

)

 

 

+10

 

 

 

(69

)

 

 

 

+20

 

 

 

+11

 

 

 

+10

 

 

 

+141

 

 

 

Third Quarter

 

 

 

Year to Date Ended 9/30

 

 

(in US$ million, except

 

 

 

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

% Change

 

 

per share data and percentages)

2021

 

2020

 

 

Reported

 

 

Ex F/X

 

 

 

2021

 

 

2020

 

 

Reported

 

 

Ex F/X

 

 

Operating Profit

$

178

 

$

556

 

 

 

(68

)

 

 

(70

)

 

 

$

753

 

 

$

781

 

 

 

(4

)

 

 

(11

)

 

Adjusted Operating Profit1

$

168

 

$

320

 

 

 

(48

)

 

 

(52

)

 

 

$

750

 

 

$

550

 

 

 

+36

 

 

 

+26

 

 

Net Income

$

104

 

$

439

 

 

 

(76

)

 

 

(79

)

 

 

$

515

 

 

$

633

 

 

 

(19

)

 

 

(26

)

 

Adjusted Net Income1

$

96

 

$

263

 

 

 

(63

)

 

 

(67

)

 

 

$

514

 

 

$

462

 

 

 

+11

 

 

 

+2

 

 

Basic Earnings Per Common Share

$

0.25

 

$

1.13

 

 

 

(78

)

 

 

(81

)

 

 

$

1.23

 

 

$

1.67

 

 

 

(26

)

 

 

(33

)

 

Adjusted Basic Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

0.23

 

$

0.68

 

 

 

(66

)

 

 

(71

)

 

 

$

1.22

 

 

$

1.21

 

 

 

+1

 

 

 

(7

)

 

Diluted Earnings Per Common Share

$

0.24

 

$

1.10

 

 

 

(78

)

 

 

(81

)

 

 

$

1.19

 

 

$

1.62

 

 

 

(27

)

 

 

(33

)

 

Adjusted Diluted Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

0.22

 

$

0.66

 

 

 

(67

)

 

 

(70

)

 

 

$

1.18

 

 

$

1.18

 

 

-

 

 

 

(8

)

 

 

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.

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, “The third quarter was challenging as the regional outbreaks heavily impacted the restaurant industry. I am grateful for our teams who worked nimbly and tirelessly to navigate these adverse conditions. We quickly adjusted operations, strengthened value promotions and product innovation to drive off-premise demand. Our digital channels enabled us to more quickly reach members with targeted promotions. We sustained system sales growth in the third quarter, with new unit openings more than offsetting same-store sales declines. Despite the near-term challenges, we continue to execute on the strategies we outlined in our September investor day to fortify resiliency and accelerate growth. With record openings of 524 new stores during the quarter and after a review of our current pipeline, we now expect to open over 1,700 gross new stores in 2021. We deepened our partnership with Lavazza to accelerate the growth of its footprint in China, aiming to open 1,000 stores by 2025. We are also excited to become a strategic investor in Hangzhou Catering Service Group, which is an important shareholder of the Hangzhou KFC joint venture and was instrumental in making Hangzhou one of our largest markets, to accelerate growth across our brands in Zhejiang province.”

 

Andy Yeung, CFO of Yum China, added, “Our third quarter results are in line with expectations that we indicated in the September business update. We took immediate action to manage costs and leverage technology to drive productivity. Looking ahead, we expect the near-term environment to be challenging. We expect that COVID-19, especially the Delta variant outbreaks, will continue to affect consumer behavior and impact our same-store sales recovery. Keep in mind that fourth quarter is the seasonally lowest quarter for

2


 

sales and profit margins, so small changes in sales and operations will considerably impact profitability. We expect restaurant margins in the fourth quarter and near-term to be pressured by the significant headwinds in (1) sales deleveraging impact, (2) rising commodity prices, and (3) wage inflation. Against this backdrop, we plan to continue to manage costs and stay agile. We will also continue to invest with discipline in store network expansion, supply chain, and digitalization for sustainable growth.

 

Dividends and Share Repurchases

 

The Board of Directors declared a cash dividend of $0.12 per share on Yum China’s common stock, payable as of the close of business on December 16, 2021 to shareholders of record as of the close of business on November 24, 2021.

 

During the third quarter, we repurchased approximately 0.57 million shares of Yum China common stock for $33.6 million at an average price of $58.56 per share. As of September 30, 2021, approximately $658 million remained available for future share repurchases under the current authorization.

 

Digital and Delivery

 

The KFC and Pizza Hut loyalty programs exceeded 350 million members combined as of quarter-end. Member sales accounted for approximately 60% of system sales in the third quarter of 2021.

 

Delivery contributed approximately 34% of KFC and Pizza Hut’s Company sales in the third quarter of 2021, an increase of approximately six percentage points from the prior year period as consumers remain cautious about dine-in.

 

Digital orders, including delivery, mobile orders and kiosk orders, accounted for approximately 87% of KFC and Pizza Hut’s Company sales in the third quarter of 2021.

KFC and Pizza Hut Total

 

Third Quarter

 

 

Year to Date Ended 9/30

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

        Member count (as of period-end)

 

350 million+

 

 

285 million+

 

 

350 million+

 

 

285 million+

 

        Member sales as % of system sales

 

~60%

 

 

~60%

 

 

~61%

 

 

~60%

 

        Delivery as % of Company sales

 

~34%

 

 

~28%

 

 

~32%

 

 

~30%

 

        Digital orders as % of Company sales

 

~87%

 

 

~78%

 

 

~86%

 

 

~78%

 

 

New-Unit Development and Asset Upgrade

 

Yum China opened 524 new stores in the third quarter of 2021, mainly driven by development of the KFC and Pizza Hut brands.

 

The Company remodeled 211 stores in the third quarter of 2021.

 

New Units

 

 

Restaurant Count

 

 

 

 

Third Quarter

 

Year to Date

 

 

As of September 30

 

 

              

 

2021

 

Ended 9/30/2021

 

 

2021

 

2020

 

 

Yum China

 

524

 

1,243

 

 

11,415

 

 

10,150

 

 

   KFC

 

362

 

895

 

 

7,908

 

 

6,925

 

 

   Pizza Hut

 

103

 

211

 

 

2,503

 

 

2,277

 

 

   Others2

 

59

 

137

 

 

1,004

 

 

948

 

 

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

 

Restaurant Margin

 

Restaurant margin was 12.2% in the third quarter of 2021, compared with 18.6% in the prior year period, primarily attributable to sales deleveraging, stepped-up promotions, wage inflation, increased rider cost associated with rising delivery volume, and lower temporary relief provided by landlords and government agencies. The benefit of favorable commodity prices in the third quarter of 2021 was partially offset by higher cost associated with the phase-out of certain plastic packaging and other packaging upgrades.

Third Quarter

 

 

 

Year to Date Ended 9/30

 

 

 

 

2021

 

 

2020

 

 

ppts change

 

 

 

2021

 

 

2020

 

 

ppts change

 

 

Yum China

 

 

12.2

%

 

 

18.6

%

 

 

(6.4

)

 

 

 

15.6

%

 

 

14.7

%

 

 

+0.9

 

 

   KFC

 

 

13.6

%

 

 

19.4

%

 

 

(5.8

)

 

 

 

16.8

%

 

 

16.2

%

 

 

+0.6

 

 

   Pizza Hut

 

 

8.2

%

 

 

16.7

%

 

 

(8.5

)

 

 

 

12.2

%

 

 

10.6

%

 

 

+1.6

 

 

 

 

 

 

 

 

3


 

 

2021 Outlook

 

We are increasing gross new stores target to over 1,700, compared to the previous target of 1,300, primarily due to the acceleration of KFC and Pizza Hut store expansion.

 

We maintain the capital expenditures target of approximately $700-800 million, benefiting from our ongoing efforts to reduce capital expenditures per new store.

 

Other Updates

 

In September 2021, the Company entered into a definitive agreement to acquire a 28% equity interest in Hangzhou Catering Service Group (“Hangzhou Catering”) for total cash consideration of approximately $250 million. Hangzhou Catering holds a 45% equity interest in the Hangzhou KFC joint venture (“Hangzhou KFC”), of which the Company currently holds a 47% equity interest. We expect to complete the acquisition in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions and regulatory approvals. Upon closing, the Company will control and consolidate Hangzhou KFC, which operates over 700 KFC stores in and around Hangzhou, with an approximately 60% equity interest, directly and indirectly. In addition to its holding in Hangzhou KFC, Hangzhou Catering operates approximately 60 Chinese dining restaurants under four time-honored brands (Zhi Wei Guan, Hangzhou Restaurant, Kui Yuan Guan and Tian Xiang Lou) and a high-growth food processing business. With this acquisition, Yum China expects to deepen the partnership with Hangzhou Catering and its key shareholder, which has a large commercial real estate portfolio in the region, in the areas of product innovations, retail product collaborations and accelerating store expansion across our brands in Zhejiang province.

 

In September 2021, Yum China and Luigi Lavazza S.p.A. (“Lavazza”) entered into agreements for the previously formed joint venture and announced plans to accelerate the expansion of Lavazza stores in China, aiming to open 1,000 stores by 2025. Together, an initial funding of $200 million will be injected into the joint venture for its future growth. The joint venture is also expected to be Lavazza’s exclusive distributor in mainland China to introduce more products from Lavazza’s global portfolio. Upon execution of these agreements in September, Yum China consolidates the joint venture results with its 65% equity interest.

 

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, October 27, 2021 (8:00 a.m. Beijing/Hong Kong Time on Thursday, October 28, 2021).  

 

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/5tbn4t8f.

 

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 registrant ID.

 

 

Pre-registration Link:

http://apac.directeventreg.com/registration/event/5193096

 

Conference ID:

5193096

 

A replay of the conference call will be available two hours after the call ends until 9:00 a.m. U.S. Eastern Time on Thursday, November 4, 2021 (9:00 p.m. Beijing/Hong Kong Time on Thursday, November 4, 2021) and may be accessed by phone at the following numbers:

 

 

U.S.:

1 855 452 5696

 

Mainland China:

400 602 2065 or 800 870 0206

 

Hong Kong:

+852 3051 2780

 

U.K.:

0808 234 0072

 

International:

+61 2 8199 0299

 

 

Replay access code:

5193096

 

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

4


 

 

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 “2021 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, growth, business plans, investment, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, the expected impact of the COVID-19 pandemic, the anticipated closing of the Hangzhou Catering investment, 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 and regional outbreaks caused by existing or new COVID-19 variants, 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 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. In addition, Yum China has partnered with Lavazza to explore and develop the Lavazza coffee shop concept in China. The Company had 11,415 restaurants in over 1,600 cities at the end of September 2021. Yum China ranked # 363 on the Fortune 500 list and was named to TIME100 Most Influential Companies list in 2021. Yum China has been named the Industry Leader for the Restaurant & Leisure Facilities Industry in the 2020 Dow Jones Sustainability Indices. In 2021, Yum China was named to the Bloomberg Gender-Equality Index and was certified as a Top Employer 2021 in China by the Top Employers Institute, both for the third consecutive year. 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

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

 

 

 

9/30/2021

 

 

9/30/2020

 

 

B/(W)

 

9/30/2021

 

 

9/30/2020

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

2,310

 

 

$

2,118

 

 

 

9

 

 

 

$

6,874

 

 

$

5,358

 

 

 

28

 

 

 

Franchise fees and income

 

 

40

 

 

 

40

 

 

 

 

 

 

 

120

 

 

 

112

 

 

 

7

 

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

184

 

 

 

170

 

 

 

8

 

 

 

 

519

 

 

 

488

 

 

 

7

 

 

 

Other revenues

 

 

20

 

 

 

20

 

 

 

2

 

 

 

 

49

 

 

 

46

 

 

 

7

 

 

 

Total revenues

 

 

2,554

 

 

 

2,348

 

 

 

9

 

 

 

 

7,562

 

 

 

6,004

 

 

 

26

 

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

743

 

 

 

660

 

 

 

(13

)

 

 

 

2,133

 

 

 

1,711

 

 

 

(25

)

 

 

Payroll and employee benefits

 

 

591

 

 

 

458

 

 

 

(29

)

 

 

 

1,675

 

 

 

1,236

 

 

 

(35

)

 

 

Occupancy and other operating expenses

 

 

694

 

 

 

606

 

 

 

(15

)

 

 

 

1,995

 

 

 

1,621

 

 

 

(23

)

 

 

Company restaurant expenses

 

 

2,028

 

 

 

1,724

 

 

 

(18

)

 

 

 

5,803

 

 

 

4,568

 

 

 

(27

)

 

 

General and administrative expenses

 

 

142

 

 

 

127

 

 

 

(13

)

 

 

 

408

 

 

 

339

 

 

 

(21

)

 

 

Franchise expenses

 

 

17

 

 

 

17

 

 

 

(1

)

 

 

 

50

 

 

 

50

 

 

 

2

 

 

 

Expenses for transactions with

   franchisees and unconsolidated affiliates

 

 

180

 

 

 

164

 

 

 

(9

)

 

 

 

509

 

 

 

480

 

 

 

(6

)

 

 

Other operating costs and expenses

 

 

17

 

 

 

15

 

 

 

(16

)

 

 

 

41

 

 

 

38

 

 

 

(9

)

 

 

Closures and impairment expenses, net

 

 

2

 

 

 

1

 

 

 

(62

)

 

 

 

13

 

 

 

30

 

 

 

57

 

 

 

Other income, net

 

 

(10

)

 

 

(256

)

 

 

(96

)

 

 

 

(15

)

 

 

(282

)

 

 

(95

)

 

 

Total costs and expenses, net

 

 

2,376

 

 

 

1,792

 

 

 

(33

)

 

 

 

6,809

 

 

 

5,223

 

 

 

(30

)

 

 

Operating Profit

 

 

178

 

 

 

556

 

 

 

(68

)

 

 

 

753

 

 

 

781

 

 

 

(4

)

 

 

Interest income, net

 

 

16

 

 

 

11

 

 

 

58

 

 

 

 

47

 

 

 

28

 

 

 

69

 

 

 

Investment (loss) gain

 

 

(39

)

 

 

38

 

 

NM

 

 

 

 

(43

)

 

 

75

 

 

NM

 

 

 

Income Before Income Taxes

 

 

155

 

 

 

605

 

 

 

(74

)

 

 

 

757

 

 

 

884

 

 

 

(14

)

 

 

Income tax provision

 

 

(44

)

 

 

(155

)

 

 

72

 

 

 

 

(210

)

 

 

(232

)

 

 

10

 

 

 

Net income – including noncontrolling interests

 

 

111

 

 

 

450

 

 

 

(75

)

 

 

 

547

 

 

 

652

 

 

 

(16

)

 

 

Net income – noncontrolling interests

 

 

7

 

 

 

11

 

 

 

31

 

 

 

 

32

 

 

 

19

 

 

 

(73

)

 

 

Net Income – Yum China Holdings, Inc.

 

$

104

 

 

$

439

 

 

 

(76

)

 

 

$

515

 

 

$

633

 

 

 

(19

)

 

 

Effective tax rate

 

 

28.3

%

 

 

25.6

%

 

 

(2.7

)

ppts.

 

 

27.7

%

 

 

26.3

%

 

 

(1.4

)

ppts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

0.25

 

 

$

1.13

 

 

 

 

 

 

 

$

1.23

 

 

$

1.67

 

 

 

 

 

 

 

Weighted-average shares outstanding

    (in millions)

 

 

422

 

 

 

387

 

 

 

 

 

 

 

 

421

 

 

 

380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share

 

$

0.24

 

 

$

1.10

 

 

 

 

 

 

 

$

1.19

 

 

$

1.62

 

 

 

 

 

 

 

Weighted-average shares outstanding

    (in millions)

 

 

435

 

 

 

400

 

 

 

 

 

 

 

 

435

 

 

 

391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends Declared Per Common Share

 

$

0.12

 

 

$

-

 

 

 

 

 

 

 

$

0.36

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Food and paper

 

 

32.2

 

 

 

31.2

 

 

 

(1.0

)

ppts.

 

 

31.0

 

 

 

31.9

 

 

 

0.9

 

ppts.

 

Payroll and employee benefits

 

 

25.6

 

 

 

21.6

 

 

 

(4.0

)

ppts.

 

 

24.4

 

 

 

23.1

 

 

 

(1.3

)

ppts.

 

Occupancy and other operating expenses

 

 

30.0

 

 

 

28.6

 

 

 

(1.4

)

ppts.

 

 

29.0

 

 

 

30.3

 

 

 

1.3

 

ppts.

 

Restaurant margin

 

 

12.2

%

 

 

18.6

%

 

 

(6.4

)

ppts.

 

 

15.6

%

 

 

14.7

%

 

 

0.9

 

ppts.

 

Operating margin

 

 

7.7

%

 

 

26.2

%

 

 

(18.5

)

ppts.

 

 

11.0

%

 

 

14.6

%

 

 

(3.6

)

ppts.

 

 

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

6


 

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

 

 

 

Quarter Ended

 

 

% Change

 

Year to Date Ended

 

 

% Change

 

 

 

9/30/2021

 

 

9/30/2020

 

 

B/(W)

 

9/30/2021

 

 

9/30/2020

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

1,750

 

 

$

1,597

 

 

 

10

 

 

 

$

5,220

 

 

$

4,077

 

 

 

28

 

 

 

Franchise fees and income

 

 

32

 

 

 

32

 

 

 

 

 

 

 

95

 

 

 

97

 

 

 

(2

)

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

17

 

 

 

16

 

 

 

1

 

 

 

 

46

 

 

 

47

 

 

 

(3