8-K
false00016733580001673358dei:OtherAddressMember2024-02-062024-02-0600016733582024-02-062024-02-06

 

 

 

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): February 6, 2024

 

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.)

 

101 East Park Boulevard, Suite 805

Plano, Texas 75074

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 February 6, 2024, Yum China Holdings, Inc. issued a press release announcing its unaudited results for the full year and fourth quarter ended December 31, 2023. 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 February 6, 2024.

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/ Pingping Liu

 

 

 

 

Name:

 

Pingping Liu

 

 

 

 

Title:

 

Chief Legal Officer

Date: February 6, 2024

 

 

 

 

 

 

 

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/490904d2e7293a3776cb263f22416dcc-img85703795_0.jpg 

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

Fourth Quarter System Sales Up 21%, Operating Profit Up 170% and Core Operating Profit Grew 324% 1

Full Year System Sales Up 21%, Operating Profit Up 76% to $1.1 Billion and Core Operating Profit Grew 79%

Record 2023 Results - Total Revenues of $11 Billion, Adjusted Operating Profit of $1.1 Billion and 1,697 Net New Stores Opened

14,644 Stores in Over 2,000 Cities

Shanghai, China (February 6, 2024) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the fourth quarter and year ended December 31, 2023.

Fourth Quarter Highlights

Total system sales grew 21% year over year excluding foreign currency translation (“F/X”). Growth was mainly attributable to 12% net new unit contribution2, 4% same-store sales growth and lapping temporary closures from the pandemic in the prior year.
Opened 542 net new stores in the fourth quarter. Total stores reached 14,644 as of December 31, 2023. KFC reached 10,296 stores and Pizza Hut reached 3,312 stores.
Total revenues increased 19% to $2.49 billion, or 21% excluding F/X.
Operating profit grew 170% to $110 million. Core operating profit grew 324%.
Restaurant margin expanded to 10.7%. Excluding items affecting comparability at the restaurant level – the impact from temporary relief and VAT deduction benefits in both years, restaurant margin expanded 170 basis points.
Diluted EPS increased 77% to $0.23. Excluding Special Items as well as unfavorable impacts of $0.01 from F/X and $0.04 from the mark-to-market investment in Meituan, the increase was 164%.
Foreign currency translation unfavorably impacted total revenues by $36 million, operating profit by $2 million and diluted EPS by $0.01.

Full Year Highlights

Total system sales grew 21% excluding F/X. Growth was mainly attributable to 9% net new unit contribution, 7% same-store sales growth and lapping temporary closures from the pandemic in the prior year.
Store count increased 13%, or 1,697 net new stores, exceeding the full-year net new store target.
Total revenues were up 15% to $10.98 billion, or 21% excluding F/X.
Operating profit grew 76% to $1.1 billion. Core operating profit grew 79%.
Restaurant margin expanded to 16.3%. Excluding items affecting comparability at the restaurant level, restaurant margin expanded 270 basis points.
Diluted EPS increased 89% to $1.97. Excluding Special Items as well as unfavorable impacts of $0.11 from F/X and $0.04 from the mark-to-market investment in Meituan, the increase was 101%.
Foreign currency translation unfavorably impacted total revenues by $589 million, operating profit by $61 million and diluted EPS by $0.11.
Shareholder returns through share repurchases and cash dividends increased 25% to $833 million.
Digital sales3 exceeded $9.2 billion, with digital ordering accounted for approximately 89% of total company sales.
Total membership of KFC and Pizza Hut exceeded 470 million, up 14% versus the prior year. Member sales accounted for approximately 65% of KFC and Pizza Hut’s system sales in the aggregate.

1 Core Operating Profit is defined as Operating Profit adjusted for Special Items, further excluding items affecting comparability and the impact of F/X. The Company uses Core Operating Profit for the purposes of evaluating the performance of its core operations. Please refer to "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details.

2 Net new unit contribution refers to sales contribution from net new stores.

3 Digital sales refer to sales at company-owned stores where orderings were placed digitally.

 


 

 

Increasing Dividends and Stepping Up Share Repurchases

Yum China returned approximately $390 million to shareholders in the fourth quarter and $833 million for the full year through share repurchases and cash dividends. This stands as the highest full year return thus far in the Company's history.
During the fourth quarter, the Company stepped up share repurchases, totaling 7.5 million shares of common stock for $336 million. In 2023 the Company repurchased 12.4 million shares, equivalent to about 3% of its total outstanding shares. As of December 31, 2023, approximately $1.5 billion remained available for future share repurchases under the current authorization program.
The Company plans to significantly accelerate the return of value to its shareholders in 2024:
o
The board declared a 23% increase in cash dividend to $0.16 per share on Yum China’s common stock, payable on March 26, 2024 to shareholders of record as of the close of business on March 5, 2024.
o
The Company plans to repurchase $1.25 billion of its common stock in 2024, through open market transactions in the U.S. and Hong Kong. This includes two primary components: (i) an aggregate repurchase amount of $750 million in 2024 under the Rule 10b5-1 of the United States Securities Exchange Act of 1934 (the "Exchange Act") in the U.S. and a similar program in Hong Kong; and (ii) an aggregate repurchase amount of $500 million in the first quarter of 2024 under the Rule 10b-18 of the Exchange Act in the U.S. and through similar transactions in Hong Kong.

 

Key Financial Results

 

Fourth Quarter

 

 

 

Full Year

 

 

 

 

 

 

%/ppts Change

 

 

 

 

 

 

 

 

%/ppts Change

 

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

 

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

System Sales Growth (4) (%)

 

21

 

 

 

(4

)

 

NM

 

 

NM

 

 

 

 

21

 

 

 

(5

)

 

NM

 

 

NM

 

Same-Store Sales Growth (4) (%)

 

4

 

 

 

(4

)

 

NM

 

 

NM

 

 

 

 

7

 

 

 

(7

)

 

NM

 

 

NM

 

Operating Profit ($mn)

 

110

 

 

 

41

 

 

 

+170

 

 

 

+175

 

 

 

 

1,106

 

 

 

629

 

 

 

+76

 

 

 

+86

 

Adjusted Operating Profit (5) ($mn)

 

116

 

 

 

40

 

 

 

+193

 

 

 

+199

 

 

 

 

1,121

 

 

 

633

 

 

 

+77

 

 

 

+87

 

Core Operating Profit (5) (6) ($mn)

 

111

 

 

 

29

 

 

NM

 

 

 

+324

 

 

 

 

1,121

 

 

 

627

 

 

NM

 

 

 

+79

 

Net Income ($mn)

 

97

 

 

 

53

 

 

 

+81

 

 

 

+84

 

 

 

 

827

 

 

 

442

 

 

 

+87

 

 

 

+97

 

Adjusted Net Income (5) ($mn)

 

103

 

 

 

52

 

 

 

+96

 

 

 

+100

 

 

 

 

842

 

 

 

446

 

 

 

+89

 

 

 

+99

 

Diluted Earnings
  Per Common Share ($)

 

0.23

 

 

 

0.13

 

 

 

+77

 

 

 

+85

 

 

 

 

1.97

 

 

 

1.04

 

 

 

+89

 

 

 

+100

 

Adjusted Diluted Earnings
  Per Common Share
(5) ($)

 

0.25

 

 

 

0.13

 

 

 

+92

 

 

 

+92

 

 

 

 

2.00

 

 

 

1.05

 

 

 

+90

 

 

 

+101

 

4 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.

5 See “Reconciliation of Reported GAAP Results to Non-GAAP Measures” included in the accompanying tables of this release for further details.

6 Current period amounts are derived by translating results at average exchange rates of the prior year period.

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

Percentages may not recompute due to rounding.

NM refers to not meaningful.

 

 

CEO Comments

 

Joey Wat, CEO of Yum China, commented, “2023 was a pivotal year for Yum China. Not only did we demonstrate strong resilience during the pandemic, but we also seized opportunities that arose from China’s reopening. In 2023, our system sales grew by 21%, surpassing the industry's growth rate, and we set new records for both revenue and profits. Our return to shareholders through cash dividends and share repurchases in 2023 was the highest since spinoff. Looking ahead, we remain very positive about the vast growth opportunities in China. Currently serving just one-third of China's population, our ambitious goal is to extend our reach to half of the population by 2026. Over half of our new stores are located in lower-tier cities, strategically positioned to capture the demand from long-term consumption upgrades there. We are also expanding our addressable market and capturing incremental sales across city tiers with innovative products, engaging campaigns and a wider range of price points. Leveraging our distinctive strengths, including brands deeply ingrained in China, remarkable agility and robust operational execution, we are well-positioned to achieve our growth targets for 2024-2026 and deliver excellent returns to our shareholders through increased cash dividends and stepped-up share buybacks.”

 

 

 

 

 

2


 

KFC

 

 

Fourth Quarter

 

Full Year

 

 

 

 

 

 

 

 

%/ppts Change

 

 

 

 

 

 

 

%/ppts Change

 

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

Restaurants

 

10,296

 

 

 

9,094

 

 

 

+13

 

 

NM

 

 

10,296

 

 

 

9,094

 

 

 

+13

 

 

NM

 

System Sales Growth (%)

 

20

 

 

 

(1

)

 

NM

 

 

NM

 

 

20

 

 

 

(4

)

 

NM

 

 

NM

 

Same-Store Sales Growth (%)

 

3

 

 

 

(3

)

 

NM

 

 

NM

 

 

7

 

 

 

(7

)

 

NM

 

 

NM

 

Total Revenues ($mn)

 

1,872

 

 

 

1,591

 

 

 

+18

 

 

 

+19

 

 

8,240

 

 

 

7,219

 

 

 

+14

 

 

 

+20

 

Operating Profit ($mn)

 

167

 

 

 

117

 

 

 

+43

 

 

 

+45

 

 

1,202

 

 

 

787

 

 

 

+53

 

 

 

+60

 

Core Operating Profit ($mn)

 

164

 

 

 

115

 

 

NM

 

 

 

+43

 

 

1,211

 

 

 

806

 

 

NM

 

 

 

+50

 

Restaurant Margin (%)

 

12.0

 

 

 

12.7

 

 

 

(0.7

)

 

 

(0.7

)

 

17.7

 

 

 

15.7

 

 

 

+2.0

 

 

 

+2.0

 

 

System sales for KFC grew 20% for the quarter and the year, primarily driven by net new unit contribution of 12% and 9%, respectively, 3% increase in same-store sales for the quarter and 7% increase for the year, as well as lapping temporary closures in the prior year.
KFC opened a record 1,202 net new stores in 2023 and reached 10,296 stores at year-end 2023.
Operating profit of $1.2 billion reached a record level with increases of 43% for the quarter and 53% for the year.
Restaurant margin was 12.0% for the quarter. Excluding items affecting comparability at the restaurant level, restaurant margin expanded 60 basis points, primarily due to sales leveraging, which was partially offset by higher promotion costs and wage inflation. Full-year restaurant margin was 17.7%. Excluding items affecting comparability at the restaurant level, restaurant margin expanded 240 basis points, primarily driven by sales leveraging and favorable commodity prices, partially offset by higher promotion costs and wage inflation.
Delivery contributed approximately 38% of KFC’s Company sales for the quarter and 36% for the year. Off-premise contributed approximately 66% for the full year 2023, compared to 69% in 2022. Dine-in significantly rebounded in 2023 compared to the pandemic-impacted prior year.

 

Pizza Hut

 

 

Fourth Quarter

 

Full Year

 

 

 

 

 

 

 

 

%/ppts Change

 

 

 

 

 

 

 

%/ppts Change

 

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

2023

 

 

2022

 

 

Reported

 

 

Ex F/X

 

Restaurants

 

3,312

 

 

 

2,903

 

 

 

+14

 

 

NM

 

 

3,312

 

 

 

2,903

 

 

 

+14

 

 

NM

 

System Sales Growth (%)

 

24

 

 

 

(6

)

 

NM

 

 

NM

 

 

20

 

 

 

(3

)

 

NM

 

 

NM

 

Same-Store Sales Growth (%)

 

6

 

 

 

(8

)

 

NM

 

 

NM

 

 

6

 

 

 

(6

)

 

NM

 

 

NM

 

Total Revenues ($mn)

 

496

 

 

 

404

 

 

 

+23

 

 

 

+24

 

 

2,246

 

 

 

1,960

 

 

 

+15

 

 

 

+21

 

Operating Profit ($mn)

 

5

 

 

 

(20

)

 

NM

 

 

NM

 

 

142

 

 

 

70

 

 

 

+102

 

 

 

+117

 

Core Operating Profit ($mn)

 

4

 

 

 

(27

)

 

NM

 

 

NM

 

 

143

 

 

 

48

 

 

NM

 

 

 

+198

 

Restaurant Margin (%)

 

7.3

 

 

 

1.9

 

 

 

+5.4

 

 

 

+5.4

 

 

11.8

 

 

 

9.2

 

 

 

+2.6

 

 

 

+2.6

 

 

System sales for Pizza Hut grew 24% for the quarter and 20% for the year, primarily driven by net new unit contribution of 12% for the quarter and 10% for the year, a 6% increase in same-store sales and lapping temporary closures in the prior year.
Pizza Hut accelerated new store openings in 2023 with a record 409 net new stores. Total stores reached 3,312 at year-end 2023.
Operating profit increased to $5 million for the quarter, compared with an operating loss of $20 million in the prior year period. For the year, operating profit was $142 million, representing 102% growth.
Restaurant margin for the quarter was 7.3%. Excluding items affecting comparability at the restaurant level, restaurant margin expanded 680 basis points, primarily driven by sales leveraging, labor productivity gain, and lower rider cost. For the full year, restaurant margin was 11.8%. Excluding items affecting comparability at the restaurant level, restaurant margin expanded 330 basis points from the prior year, primarily driven by sales leveraging and favorable commodity prices, which was partially offset by wage inflation and higher promotion costs.
Delivery contributed approximately 40% of Pizza Hut’s Company sales for the quarter and 37% for the year. Off-premise contributed approximately 46% for the year, compared to 52% in 2022, significantly above pre-pandemic 2019 level of 30%.

 

3


 

Outlook

In 2024, Yum China plans to

Open approximately 1,500 to 1,700 net new stores.
Make capital expenditures in the range of approximately $700 million to $850 million.

From 2024 to 2026, Yum China targets to

Reach a total store count of 20,000 by 2026.
Achieve a high-single-to-double-digit CAGR for system sales and operating profit, and a double-digit CAGR for EPS, using 2023 as the base year excluding F/X.
Return a minimum of $3 billion to shareholders through quarterly dividends and share repurchases.

Other Updates

Yum China was ranked number one globally for the Restaurant & Leisure Facilities Industry in the S&P Global 2023 Corporate Sustainability Assessment, reflecting its unwavering commitment to environmental, social, and governance. 2023 marked the fourth consecutive year that Yum China was selected as a member of both the Dow Jones Sustainability Indices: World Index and Emerging Market Index.
Yum China was once again named by Top Employers Institute as a Top Employer in China for the sixth consecutive year. Yum China was first in the restaurant industry. This latest recognition underscores the Company’s continued dedication to providing an exceptional working environment and experience for its people.
Yum China has been named to the Fortune World’s Most Admired Companies list for 2024, ranked #5 in the food service industry.

 

Note on Non-GAAP Measures

Reported GAAP results include items that are excluded from non-GAAP measures. See “Reconciliation of Reported GAAP Results to Non-GAAP Measures” and “Segment Results” within this release for non-GAAP reconciliation details.

 

Conference Call

 

Yum China’s management will hold an earnings conference call at 7:00 p.m. U.S. Eastern Time on Tuesday, February 6, 2024 (8:00 a.m. Beijing/Hong Kong Time on Wednesday, February 7, 2024).

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/rav3hcwk.

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/10035579-wp1ljg.html

A replay of the conference call will be available one hour after the call ends until Wednesday, February 14, 2024 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 PIN:

10035579

 

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

4


 

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 “2024 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, investments, store openings, capital expenditures, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, 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, and those set forth under the caption “Risk Factors” in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q). 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 caption “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 2,000 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

 

5


 

Yum China Holdings, Inc.

Condensed Consolidated Statements of Income

(in US$ million, except per share data)

(unaudited)

 

 

 

Quarter Ended

 

 

% Change

 

Year Ended

 

 

% Change

 

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

2,343

 

 

$

1,975

 

 

 

19

 

 

 

$

10,391

 

 

$

9,110

 

 

 

14

 

 

Franchise fees and income

 

 

20

 

 

 

16

 

 

 

24

 

 

 

 

89

 

 

 

81

 

 

 

11

 

 

Revenues from transactions with franchisees

 

 

90

 

 

 

68

 

 

 

32

 

 

 

 

372

 

 

 

287

 

 

 

30

 

 

Other revenues

 

 

40

 

 

 

29

 

 

 

37

 

 

 

 

126

 

 

 

91

 

 

 

39

 

 

Total revenues

 

 

2,493

 

 

 

2,088

 

 

 

19

 

 

 

 

10,978

 

 

 

9,569

 

 

 

15

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

758

 

 

 

630

 

 

 

(20

)

 

 

 

3,224

 

 

 

2,836

 

 

 

(14

)

 

Payroll and employee benefits

 

 

678

 

 

 

570

 

 

 

(19

)

 

 

 

2,725

 

 

 

2,389

 

 

 

(14

)

 

Occupancy and other operating expenses

 

 

654

 

 

 

570

 

 

 

(15

)

 

 

 

2,752

 

 

 

2,604

 

 

 

(6

)

 

Company restaurant expenses

 

 

2,090

 

 

 

1,770

 

 

 

(18

)

 

 

 

8,701

 

 

 

7,829

 

 

 

(11

)

 

General and administrative expenses

 

 

153

 

 

 

145

 

 

 

(5

)

 

 

 

638

 

 

 

594

 

 

 

(7

)

 

Franchise expenses

 

 

8

 

 

 

7

 

 

 

(9

)

 

 

 

36

 

 

 

34

 

 

 

(2

)

 

Expenses for transactions with franchisees

 

 

86

 

 

 

67

 

 

 

(28

)

 

 

 

356

 

 

 

279

 

 

 

(28

)

 

Other operating costs and expenses

 

 

35

 

 

 

25

 

 

 

(38

)

 

 

 

112

 

 

 

78

 

 

 

(43

)

 

Closures and impairment expenses, net

 

 

12

 

 

 

12

 

 

 

5

 

 

 

 

29

 

 

 

32

 

 

 

11

 

 

Other (income) expenses, net

 

 

(1

)

 

 

21

 

 

NM

 

 

 

 

 

 

 

94

 

 

 

100

 

 

Total costs and expenses, net

 

 

2,383

 

 

 

2,047

 

 

 

(16

)

 

 

 

9,872

 

 

 

8,940

 

 

 

(10

)

 

Operating Profit

 

 

110

 

 

 

41

 

 

 

170

 

 

 

 

1,106

 

 

 

629

 

 

 

76

 

 

Interest income, net

 

 

45

 

 

 

33

 

 

 

33

 

 

 

 

169

 

 

 

84

 

 

 

101

 

 

Investment (loss) gain

 

 

(17

)

 

 

6

 

 

NM

 

 

 

 

(49

)

 

 

(26

)

 

 

(91

)

 

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

 

 

138

 

 

 

80

 

 

 

71

 

 

 

 

1,226

 

 

 

687

 

 

 

78

 

 

Income tax provision

 

 

(33

)

 

 

(24

)

 

 

(39

)

 

 

 

(329

)

 

 

(207

)

 

 

(59

)

 

Equity in net earnings (losses) from
   equity method investments

 

 

2

 

 

 

2

 

 

 

9

 

 

 

 

4

 

 

 

(2

)

 

NM

 

 

Net income – including noncontrolling interests

 

 

107

 

 

 

58

 

 

 

81

 

 

 

 

901

 

 

 

478

 

 

 

88

 

 

Net income – noncontrolling interests

 

 

10

 

 

 

5

 

 

 

(86

)

 

 

 

74

 

 

 

36

 

 

 

(106

)

 

Net Income – Yum China Holdings, Inc.

 

$

97

 

 

$

53

 

 

 

81

 

 

 

$

827

 

 

$

442

 

 

 

87

 

 

Effective tax rate

 

 

24.2

%

 

 

29.9

%

 

 

5.7

 

ppts.

 

 

26.9

%

 

 

30.1

%

 

 

3.2

 

ppts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

0.23

 

 

$

0.13

 

 

 

 

 

 

$

1.99

 

 

$

1.05

 

 

 

 

 

Weighted-average shares outstanding
    (in millions)

 

 

411

 

 

 

419

 

 

 

 

 

 

 

416

 

 

 

421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share

 

$

0.23

 

 

$

0.13

 

 

 

 

 

 

$

1.97

 

 

$

1.04

 

 

 

 

 

Weighted-average shares outstanding
    (in millions)

 

 

415

 

 

 

423

 

 

 

 

 

 

 

420

 

 

 

425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

Food and paper

 

 

32.4

 

 

 

31.9

 

 

 

(0.5

)

ppts.

 

 

31.0

 

 

 

31.1

 

 

 

0.1

 

ppts.

Payroll and employee benefits

 

 

29.0

 

 

 

28.8

 

 

 

(0.2

)

ppts.

 

 

26.2

 

 

 

26.2

 

 

 

 

ppts.

Occupancy and other operating expenses

 

 

27.9

 

 

 

28.9

 

 

 

1.0

 

ppts.

 

 

26.5

 

 

 

28.6

 

 

 

2.1

 

ppts.

Restaurant margin

 

 

10.7

%

 

 

10.4

%

 

 

0.3

 

ppts.

 

 

16.3

%

 

 

14.1

%

 

 

2.2

 

ppts.

Operating margin

 

 

4.7

%

 

 

2.1

%

 

 

2.6

 

ppts.

 

 

10.6

%

 

 

6.9

%

 

 

3.7

 

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 Ended

 

 

% Change

 

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

1,842

 

 

$

1,566

 

 

 

18

 

 

 

$

8,116

 

 

$

7,120

 

 

 

14

 

 

Franchise fees and income

 

 

14

 

 

 

12

 

 

 

14

 

 

 

 

62

 

 

 

56

 

 

 

10

 

 

Revenues from transactions with franchisees

 

 

12

 

 

 

9

 

 

 

35

 

 

 

 

45

 

 

 

33

 

 

 

37

 

 

Other revenues

 

 

4

 

 

 

4

 

 

 

(15

)

 

 

 

17

 

 

 

10

 

 

 

60

 

 

Total revenues

 

 

1,872

 

 

 

1,591

 

 

 

18

 

 

 

 

8,240

 

 

 

7,219

 

 

 

14

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

598

 

 

 

496

 

 

 

(21

)

 

 

 

2,512

 

 

 

2,208

 

 

 

(14

)

 

Payroll and employee benefits

 

 

519

 

 

 

434

 

 

 

(20

)

 

 

 

2,057

 

 

 

1,797

 

 

 

(14

)

 

Occupancy and other operating expenses

 

 

504

 

 

 

437

 

 

 

(15

)

 

 

 

2,107

 

 

 

1,994

 

 

 

(6

)

 

Company restaurant expenses

 

 

1,621

 

 

 

1,367

 

 

 

(19

)

 

 

 

6,676

 

 

 

5,999

 

 

 

(11

)

 

General and administrative expenses

 

 

60

 

 

 

63

 

 

 

5

 

 

 

 

263

 

 

 

254

 

 

 

(4

)

 

Franchise expenses

 

 

7

 

 

 

6

 

 

 

(8

)

 

 

 

31

 

 

 

29

 

 

 

(2

)

 

Expenses for transactions with franchisees

 

 

10

 

 

 

8

 

 

 

(32

)

 

 

 

39

 

 

 

30

 

 

 

(33

)

 

Other operating costs and expenses

 

 

4

 

 

 

3

 

 

 

(1

)

 

 

 

15

 

 

 

7

 

 

 

(91

)

 

Closures and impairment expenses, net

 

 

3

 

 

 

5

 

 

 

47

 

 

 

 

12

 

 

 

16

 

 

 

28

 

 

Other expenses, net

 

 

 

 

 

22

 

 

 

99

 

 

 

 

2

 

 

 

97

 

 

 

98

 

 

Total costs and expenses, net

 

 

1,705

 

 

 

1,474

 

 

 

(16

)

 

 

 

7,038

 

 

 

6,432

 

 

 

(9

)

 

Operating Profit

 

$

167

 

 

$

117

 

 

 

43

 

 

 

$

1,202

 

 

$

787

 

 

 

53

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

Food and paper

 

 

32.5

 

 

 

31.7

 

 

 

(0.8

)

ppts.

 

 

31.0

 

 

 

31.0

 

 

 

 

ppts.

Payroll and employee benefits

 

 

28.2

 

 

 

27.7

 

 

 

(0.5

)

ppts.

 

 

25.3

 

 

 

25.2

 

 

 

(0.1

)

ppts.

Occupancy and other operating expenses

 

 

27.3

 

 

 

27.9

 

 

 

0.6

 

ppts.

 

 

26.0

 

 

 

28.1

 

 

 

2.1

 

ppts.

Restaurant margin

 

 

12.0

%

 

 

12.7

%

 

 

(0.7

)

ppts.

 

 

17.7

%

 

 

15.7

%

 

 

2.0

 

ppts.

Operating margin

 

 

9.1

%

 

 

7.4

%

 

 

1.7

 

ppts.

 

 

14.8

%

 

 

11.0

%

 

 

3.8

 

ppts.

 

Percentages may not recompute due to rounding.

7


 

Yum China Holdings, Inc.

Pizza Hut Operating Results

(in US$ million)

(unaudited)

 

 

 

Quarter Ended

 

 

% Change

 

Year Ended

 

 

% Change

 

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

 

12/31/2023

 

 

12/31/2022

 

 

B/(W)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

486

 

 

$

398

 

 

 

22

 

 

 

$

2,214

 

 

$

1,939

 

 

 

14

 

 

Franchise fees and income

 

 

1

 

 

 

1

 

 

 

25

 

 

 

 

7

 

 

 

7

 

 

 

9

 

 

Revenues from transactions with franchisees

 

 

1

 

 

 

1

 

 

 

9

 

 

 

 

4

 

 

 

4

 

 

 

11

 

 

Other revenues

 

 

8

 

 

 

4

 

 

 

90

 

 

 

 

21

 

 

 

10

 

 

 

114

 

 

Total revenues

 

 

496

 

 

 

404

 

 

 

23

 

 

 

 

2,246

 

 

 

1,960

 

 

 

15

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

155

 

 

 

131

 

 

 

(18

)

 

 

 

692

 

 

 

612

 

 

 

(13

)

 

Payroll and employee benefits

 

 

153

 

 

 

135

 

 

 

(14

)

 

 

 

649

 

 

 

572

 

 

 

(14

)

 

Occupancy and other operating expenses

 

 

141

 

 

 

125

 

 

 

(13

)

 

 

 

610

 

 

 

577

 

 

 

(6

)

 

Company restaurant expenses

 

 

449

 

 

 

391

 

 

 

(15

)

 

 

 

1,951

 

 

 

1,761

 

 

 

(11

)

 

General and administrative expenses

 

 

29

 

 

 

26

 

 

 

(11

)

 

 

 

118

 

 

 

110

 

 

 

(7

)

 

Franchise expenses

 

 

1

 

 

 

1

 

 

 

(13

)

 

 

 

4

 

 

 

4

 

 

 

(8

)

 

Expenses for transactions with franchisees

 

 

1

 

 

 

 

 

 

(11

)

 

 

 

4

 

 

 

3

 

 

 

(11

)

 

Other operating costs and expenses

 

 

8

 

 

 

3

 

 

 

(117

)

 

 

 

19

 

 

 

8

 

 

 

(124

)

 

Closures and impairment expenses, net

 

 

3

 

 

 

3

 

 

 

1

 

 

 

 

8

 

 

 

4

 

 

 

(135

)

 

Total costs and expenses, net

 

 

491

 

 

 

424

 

 

 

(16

)

 

 

 

2,104

 

 

 

1,890

 

 

 

(11

)

 

Operating Profit

 

$

5

 

 

$

(20

)

 

NM

 

 

 

$

142

 

 

$

70

 

 

 

102

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

100.0

%

 

 

100.0

%

 

 

 

 

Food and paper

 

 

32.0

 

 

 

32.9

 

 

 

0.9

 

ppts.

 

 

31.3

 

 

 

31.5

 

 

 

0.2

 

ppts.

Payroll and employee benefits

 

 

31.7

 

 

 

33.9

 

 

 

2.2

 

ppts.

 

 

29.3

 

 

 

29.5

 

 

 

0.2

 

ppts.

Occupancy and other operating expenses

 

 

29.0

 

 

 

31.3

 

 

 

2.3

 

ppts.

 

 

27.6

 

 

 

29.8

 

 

 

2.2

 

ppts.

Restaurant margin

 

 

7.3

%

 

 

1.9

%

 

 

5.4

 

ppts.

 

 

11.8

%

 

 

9.2

%

 

 

2.6

 

ppts.

Operating margin

 

 

1.1

%

 

 

(5.0

)%

 

 

6.1

 

ppts.

 

 

6.4

%

 

 

3.6

%

 

 

2.8

 

ppts.

 

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

 

 

8


 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(in US$ million)

 

 

 

12/31/2023

 

 

12/31/2022

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,128

 

 

$

1,130

 

Short-term investments

 

 

1,472

 

 

 

2,022

 

Accounts receivable, net

 

 

68

 

 

 

64

 

Inventories, net

 

 

424

 

 

 

417

 

Prepaid expenses and other current assets

 

 

339

 

 

 

307

 

Total Current Assets

 

 

3,431

 

 

 

3,940

 

Property, plant and equipment, net

 

 

2,310

 

 

 

2,118

 

Operating lease right-of-use assets

 

 

2,217

 

 

 

2,219

 

Goodwill

 

 

1,932

 

 

 

1,988

 

Intangible assets, net

 

 

150

 

 

 

159

 

Long-term bank deposits and notes

 

 

1,265

 

 

 

680

 

Equity investments

 

 

332

 

 

 

361

 

Deferred income tax assets

 

 

129

 

 

 

113

 

Other assets

 

 

265

 

 

 

248

 

Total Assets