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, Feb. 6, 2024 /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") YUMC 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 contribution(2), 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 sales(3) 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:

    - 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.

    - 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."

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%.

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 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

 

 

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.

 

 

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.

 

 

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.

 

 

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





12,031







11,826

















LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY













Current Liabilities













Accounts payable and other current liabilities





2,164







2,096



Short-term borrowings





168







2



Income taxes payable





90







68



Total Current Liabilities





2,422







2,166



Non-current operating lease liabilities





1,899







1,906



Non-current finance lease liabilities





44







42



Deferred income tax liabilities





390







390



Other liabilities





157







162



Total Liabilities





4,912







4,666

















Redeemable Noncontrolling Interest





13







12

















Equity













Common stock,  $0.01 par value; 1,000 million shares authorized;

       407 million shares and 419 million shares issued and outstanding

       at December 31, 2023 and 2022, respectively.





4







4



Additional paid-in capital





4,320







4,390



Retained earnings





2,310







2,191



Accumulated other comprehensive loss





(229)







(103)



Total Yum China Holdings, Inc. Stockholders' Equity





6,405







6,482



Noncontrolling interests





701







666



Total Equity





7,106







7,148



Total Liabilities, Redeemable Noncontrolling Interest and Equity



$

12,031





$

11,826

















 

 

Yum China Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in US$ million)

(unaudited)







Year Ended





12/31/2023



12/31/2022

 Cash Flows – Operating Activities

















 Net income – including noncontrolling interests



$

901







$

478





 Depreciation and amortization





453









602





 Non-cash operating lease cost





404









435





 Closures and impairment expenses





29









32





 Investment loss





49









26





 Equity in net (earnings) losses from equity method investments





(4)









2





 Distributions of income received from equity method investments





11









7





 Deferred income taxes





(10)









(20)





 Share-based compensation expense





64









42





 Changes in accounts receivable





(6)









(1)





 Changes in inventories





(19)









(19)





 Changes in prepaid expenses, other current assets and VAT assets





(35)









207





 Changes in accounts payable and other current liabilities





84









16





 Changes in income taxes payable





25









25





 Changes in non-current operating lease liabilities





(407)









(396)





 Other, net





(66)









(23)





 Net Cash Provided by Operating Activities





1,473









1,413





 Cash Flows – Investing Activities

















 Capital spending





(710)









(679)





 Purchases of short-term investments, long-term bank deposits and notes





(3,517)









(5,189)





 Maturities of short-term investments, long-term bank deposits and notes





3,499









5,365





 Acquisition of business, net of cash acquired













(23)





 Acquisition of equity investment





(20)













 Other, net





5









4





 Net Cash Used in Investing Activities





(743)









(522)





 Cash Flows – Financing Activities

















 Proceeds from short-term borrowings





264









2





 Payment of short-term borrowings





(100)













 Repurchase of shares of common stock





(613)









(466)





 Cash dividends paid on common stock





(216)









(202)





 Dividends paid to noncontrolling interests





(77)









(72)





 Acquisitions of noncontrolling interests













(113)





 Contributions from noncontrolling interests





35









18





 Payment of acquisition related holdback





(3)









(7)





 Other, net





(6)









(4)





 Net Cash Used in Financing Activities





(716)









(844)





 Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash





(16)









(53)





 Net Decrease in Cash, Cash Equivalents and Restricted Cash





(2)









(6)





 Cash, Cash Equivalents, and Restricted Cash - Beginning of Year





1,130









1,136





 Cash, Cash Equivalents, and Restricted Cash - End of Year



$

1,128







$

1,130





In this press release:

  • Certain performance metrics and non-GAAP measures are presented excluding the impact of foreign currency translation ("F/X"). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
  • System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants that operate our restaurant concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise restaurants typically generate ongoing franchise fees for the Company at an average rate of approximately 6% of system sales. Franchise restaurant sales are not included in Company sales in the Condensed Consolidated Statements of Income; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth.
  • Effective January 1, 2018, the Company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the Company system that have been open prior to the first day of our prior fiscal year, excluding the period during which stores are temporarily closed. We refer to these as our "base" stores. Previously, same-store sales growth represented the estimated percentage change in sales of all restaurants in the Company system that have been open for one year or more, including stores temporarily closed, and the base stores changed on a rolling basis from month to month. This revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores.
  • Certain comparative items in the Condensed Consolidated Financial Statements have been reclassified to conform to the current period's presentation to facilitate comparison.

Unit Count by Brand

KFC





12/31/2022





New Builds





Closures





Acquired





Refranchised





12/31/2023



Company-owned





8,214







1,246







(222)







2







(3)







9,237



Franchisees





880







193







(15)







(2)







3







1,059



Total





9,094







1,439







(237)



















10,296



Pizza Hut





12/31/2022





New Builds





Closures





Refranchised





12/31/2023



Company-owned





2,760







515







(118)







(2)







3,155



Franchisees





143







16







(4)







2







157



Total





2,903







531







(122)













3,312



Others





12/31/2022





New Builds





Closures





12/31/2023



Company-owned





187







93







(24)







256



Franchisees





763







142







(125)







780



Total





950







235







(149)







1,036



 

Reconciliation of Reported GAAP Results to Non-GAAP Measures

(in millions, except per share data)

(unaudited)

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides the following non-GAAP measures:

  • Measures adjusted for Special Items, which include Adjusted Operating Profit, Adjusted Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted Effective Tax Rate and Adjusted EBITDA;
  • Company Restaurant Profit ("Restaurant profit") and Restaurant margin;
  • Core Operating Profit that excludes Special Items, and further adjusted for Items Affecting Comparability and the impact of F/X;

These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP.  Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our core operations.

With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for equity in net earnings (losses) from equity method investments, income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analyst may find it useful in measuring operating performance without regard to such non-cash items.

Restaurant Profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Restaurant margin is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.

Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies, VAT deductions due to tax policy changes, and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results, and we use this measure for the purposes of evaluating the performance of our core operations.

The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release.





Quarter Ended





Year Ended







12/31/2023





12/31/2022





12/31/2023





12/31/2022





























Non-GAAP Reconciliations



















































Reconciliation of Operating Profit to Adjusted Operating Profit

























Operating Profit



$

110





$

41





$

1,106





$

629



Special Items, Operating Profit





(6)







1







(15)







(4)



Adjusted Operating Profit



$

116





$

40





$

1,121





$

633



Reconciliation of Net Income to Adjusted Net Income

























Net Income – Yum China Holdings, Inc.



$

97





$

53





$

827





$

442



Special Items, Net Income –Yum China Holdings, Inc.





(6)







1







(15)







(4)



Adjusted Net Income – Yum China Holdings, Inc.



$

103





$

52





$

842





$

446



Reconciliation of EPS to Adjusted EPS

























Basic Earnings Per Common Share



$

0.23





$

0.13





$

1.99





$

1.05



Special Items, Basic Earnings Per Common Share





(0.02)













(0.03)







(0.01)



Adjusted Basic Earnings Per Common Share



$

0.25





$

0.13





$

2.02





$

1.06



Diluted Earnings Per Common Share



$

0.23





$

0.13





$

1.97





$

1.04



Special Items, Diluted Earnings Per Common Share





(0.02)













(0.03)







(0.01)



Adjusted Diluted Earnings Per Common Share



$

0.25





$

0.13





$

2.00





$

1.05



Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate

























Effective tax rate





24.2

%





29.9

%





26.9

%





30.1

%

Impact on effective tax rate as a result of Special Items





1.0

%





(0.4)

%





0.4

%





0.2

%

Adjusted effective tax rate





23.2

%





30.3

%





26.5

%





29.9

%

Net income, along with the reconciliation to Adjusted EBITDA, is presented below:





Quarter Ended





Year Ended







12/31/2023





12/31/2022





12/31/2023





12/31/2022



Reconciliation of Net Income to Adjusted EBITDA

























Net Income – Yum China Holdings, Inc.



$

97





$

53





$

827





$

442



Net income – noncontrolling interests





10







5







74







36



Equity in net (earnings) losses from equity method investments





(2)







(2)







(4)







2



Income tax provision





33







24







329







207



Interest income, net





(45)







(33)







(169)







(84)



Investment loss (gain)





17







(6)







49







26



Operating Profit





110







41







1,106







629



Special Items, Operating Profit





6







(1)







15







4



Adjusted Operating Profit





116







40







1,121







633



Depreciation and amortization





114







135







453







602



Store impairment charges





13







14







37







51



Adjusted EBITDA



$

243





$

189





$

1,611





$

1,286



Details of Special Items are presented below:





Quarter Ended





Year Ended







12/31/2023





12/31/2022





12/31/2023





12/31/2022





























Share-based compensation expense for Partner PSU Awards(1)



$

(6)





$

1





$

(15)





$

(4)



Special Items, Operating Profit





(6)







1







(15)







(4)



Tax effect on Special Items(2)

























Special Items, net income – including noncontrolling interests





(6)







1







(15)







(4)



Special Items, net income – noncontrolling interests

























Special Items, Net Income –Yum China Holdings, Inc.



$

(6)





$

1





$

(15)





$

(4)



Weighted-average Diluted Shares Outstanding (in millions)





415







423







420







425



Special Items, Diluted Earnings Per Common Share



$

(0.02)





$





$

(0.03)





$

(0.01)



(1)  In February 2020, the Company granted Partner PSU Awards to select employees who were deemed critical to the Company's execution of its strategic operating plan. These PSU awards will only vest if threshold performance goals are achieved over a four-year performance period, with the payout ranging from 0% to 200% of the target number of shares subject to the PSU awards. Partner PSU Awards were granted to address increased competition for executive talent, motivate transformational performance and encourage management retention. Given the unique nature of these grants, the Compensation Committee does not intend to grant similar, special grants to the same employees during the performance period. The impact from these special awards is excluded from metrics that management uses to assess the Company's performance.

(2)  The tax expense was determined based upon the nature, as well as the jurisdiction, of each Special Item at the applicable tax rate.

Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:



Quarter ended







% Change



Year ended





% Change





12/31/2023





12/31/2022





B/(W)



12/31/2023





12/31/2022





B/(W)



Reconciliation of Operating Profit to Core Operating Profit









































Operating profit

$

110





$

41







170







$

1,106





$

629







76







Special Items, Operating Profit



6







(1)















15







4













Adjusted Operating Profit

$

116





$

40







193







$

1,121





$

633







77







Items Affecting Comparability









































Temporary relief from landlords(1)



(1)







(12)















(11)







(39)













Temporary relief from government agencies(2)



(3)







(14)















(7)







(48)













VAT deductions(3)



(2)







(8)















(44)







(16)













Amortization of reacquired franchise rights(4)









23















2







97













F/X impact



1





















60



















Core Operating Profit

$

111





$

29







324







$

1,121





$

627







79







 

(1)  In relation to the effects of the COVID-19 pandemic, the Company was granted lease concessions from landlords. The lease concessions were primarily in the form of rent reduction over the period of time when the Company's restaurant business was adversely impacted. Such concessions were primarily recognized as a reduction of Occupancy and other operating expenses within Company restaurant expenses included in the Condensed Consolidated Statement of Income in the period the concession was granted.

(2)  In relation to the effects of the COVID-19 pandemic, the government issued a policy in 2020 on reducing enterprise social security contribution, and the Company recorded one-time relief of $11 million and $33 million, respectively, for the fourth quarter and year ended December 31, 2022. In addition, this also includes government subsidies for employee benefits and providing training to employees, with higher amounts received during 2022 impacted by the COVID-19 pandemic. The temporary relief was primarily recognized as a reduction to Payroll and employee benefits within Company restaurant expenses included in the Condensed Consolidated Statement of Income.

(3)  Pursuant to the tax policy issued by relevant government authorities, general VAT taxpayers in certain industries that meet certain criteria are allowed to claim an additional 10% or 15% input VAT, which will be used to offset their VAT payables. This VAT policy was further extended to December 31, 2023 but the additional deduction was reduced to 5% or 10% respectively. VAT deductions were primarily recorded as a reduction to Food and paper and Occupancy and other operating expenses within Company restaurant expenses included in the Condensed Consolidated Statements of Income. Based on the information currently available to the Company, such preferential policy is not expected to be extended.

(4)  As a result of the acquisition of our previously unconsolidated joint ventures of Hangzhou KFC, Suzhou KFC and Wuxi KFC, $66 million, $61 million and $61 million of the purchase price were allocated to intangible assets related to reacquired franchise rights, respectively, which were amortized over the remaining franchise contract period of 1 year, 2.4 years and 5 years, respectively. The reacquired franchise rights were fully amortized as of March 31, 2023. The amortization was recorded in Other (Income) Expenses, net included in the Condensed Consolidated Statements of Income.

Yum China Holdings, Inc.

Segment Results

(in US$ million)

(unaudited)







Quarter Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



Company sales



$

1,842





$

486





$

15





$





$





$

2,343



Franchise fees and income





14







1







5



















20



Revenues from transactions with franchisees(2)





12







1







18







59













90



Other revenues





4







8







156







12







(140)







40



Total revenues



$

1,872





$

496





$

194





$

71





$

(140)





$

2,493



Company restaurant expenses





1,621







449







20



















2,090



General and administrative expenses





60







29







11







53













153



Franchise expenses





7







1

























8



Expenses for transactions with franchisees(2)





10







1







17







58













86



Other operating costs and expenses





4







8







151







12







(140)







35



Closures and impairment expenses, net





3







3







6



















12



Other expenses (income), net























(1)













(1)



Total costs and expenses, net





1,705







491







205







122







(140)







2,383



Operating Profit (Loss)



$

167





$

5





$

(11)





$

(51)





$





$

110



 

Reconciliation of GAAP Operating Profit to Restaurant Profit





Quarter Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

167





$

5





$

(11)





$

(51)





$





$

110



Less:





































Franchise fees and income





14







1







5



















20



Revenues from transactions with franchisees(2)





12







1







18







59













90



Other revenues





4







8







156







12







(140)







40



Add:





































General and administrative expenses





60







29







11







53













153



Franchise expenses





7







1

























8



Expenses for transactions with franchisees(2)





10







1







17







58













86



Other operating costs and expenses





4







8







151







12







(140)







35



Closures and impairment expenses, net





3







3







6



















12



Other expenses (income), net























(1)













(1)



Restaurant profit (loss)



$

221





$

37





$

(5)





$





$





$

253



Company sales





1,842







486







15



















2,343



Restaurant margin %





12.0

%





7.3

%





(35.9)

%



N/A





N/A







10.7

%

 

Reconciliation of GAAP Operating Profit to Core Operating Profit





Quarter Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

167





$

5





$

(11)





$

(51)





$





$

110



Special Items, Operating Profit























6













6



Adjusted Operating Profit



$

167





$

5





$

(11)





$

(45)





$





$

116



Items Affecting Comparability





































Temporary relief from landlords





(1)































(1)



Temporary relief from government agencies





(2)







(1)

























(3)



VAT deductions





(2)































(2)



Amortization of reacquired franchise rights





































F/X impact





2



















(1)













1



Core Operating Profit (Loss)



$

164





$

4





$

(11)





$

(46)





$





$

111



 





Quarter Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



Company sales



$

1,566





$

398





$

11





$





$





$

1,975



Franchise fees and income





12







1







3



















16



Revenues from transactions with franchisees(2)





9







1







10







48













68



Other revenues





4







4







156







11







(146)







29



Total revenues



$

1,591





$

404





$

180





$

59





$

(146)





$

2,088



Company restaurant expenses





1,367







391







15













(3)







1,770



General and administrative expenses





63







26







10







46













145



Franchise expenses





6







1

























7



Expenses for transactions with franchisees(2)





8













11







48













67



Other operating costs and expenses





3







3







151







11







(143)







25



Closures and impairment expenses, net





5







3







4



















12



Other expenses (income), net





22



















(1)













21



Total costs and expenses, net





1,474







424







191







104







(146)







2,047



Operating Profit (Loss)



$

117





$

(20)





$

(11)





$

(45)





$





$

41



 

Reconciliation of GAAP Operating Profit to Restaurant Profit





Quarter Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

117





$

(20)





$

(11)





$

(45)





$





$

41



Less:





































Franchise fees and income





12







1







3



















16



Revenues from transactions with franchisees(2)





9







1







10







48













68



Other revenues





4







4







156







11







(146)







29



Add:





































General and administrative expenses





63







26







10







46













145



Franchise expenses





6







1

























7



Expenses for transactions with franchisees(2)





8













11







48













67



Other operating costs and expenses





3







3







151







11







(143)







25



Closures and impairment expenses, net





5







3







4



















12



Other expenses (income), net





22



















(1)













21



Restaurant profit (loss)



$

199





$

7





$

(4)





$





$

3





$

205



Company sales





1,566







398







11



















1,975



Restaurant margin %





12.7

%





1.9

%





(42.6)

%



N/A





N/A







10.4

%

 

Reconciliation of GAAP Operating Profit to Core Operating Profit





Quarter Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

117





$

(20)





$

(11)





$

(45)





$





$

41



Special Items, Operating Profit























(1)













(1)



Adjusted Operating Profit



$

117





$

(20)





$

(11)





$

(46)





$





$

40



Items Affecting Comparability





































Temporary relief from landlords





(10)







(2)

























(12)



Temporary relief from government agencies





(10)







(4)

























(14)



VAT deductions





(5)







(1)







(2)



















(8)



Amortization of reacquired franchise rights





23































23



F/X impact





































Core Operating Profit (Loss)



$

115





$

(27)





$

(13)





$

(46)





$





$

29



 





Year Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



Company sales



$

8,116





$

2,214





$

61





$





$





$

10,391



Franchise fees and income





62







7







20



















89



Revenues from transactions with franchisees(2)





45







4







74







249













372



Other revenues





17







21







624







44







(580)







126



Total revenues



$

8,240





$

2,246





$

779





$

293





$

(580)





$

10,978



Company restaurant expenses





6,676







1,951







76













(2)







8,701



General and administrative expenses





263







118







43







214













638



Franchise expenses





31







4







1



















36



Expenses for transactions with franchisees(2)





39







4







67







246













356



Other operating costs and expenses





15







19







614







42







(578)







112



Closures and impairment expenses, net





12







8







9



















29



Other expenses (income), net





2



















(2)















Total costs and expenses, net





7,038







2,104







810







500







(580)







9,872



Operating Profit (Loss)



$

1,202





$

142





$

(31)





$

(207)





$





$

1,106



 

Reconciliation of GAAP Operating Profit to Restaurant Profit





Year Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

1,202





$

142





$

(31)





$

(207)





$





$

1,106



Less:





































Franchise fees and income





62







7







20



















89



Revenues from transactions with franchisees(2)





45







4







74







249













372



Other revenues





17







21







624







44







(580)







126



Add:





































General and administrative expenses





263







118







43







214













638



Franchise expenses





31







4







1



















36



Expenses for transactions with franchisees(2)





39







4







67







246













356



Other operating costs and expenses





15







19







614







42







(578)







112



Closures and impairment expenses, net





12







8







9



















29



Other expenses (income), net





2



















(2)















Restaurant profit (loss)



$

1,440





$

263





$

(15)





$





$

2





$

1,690



Company sales





8,116







2,214







61



















10,391



Restaurant margin %





17.7

%





11.8

%





(25.1)

%



N/A





N/A







16.3

%

 

Reconciliation of GAAP Operating Profit to Core Operating Profit





Year Ended 12/31/2023







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

1,202





$

142





$

(31)





$

(207)





$





$

1,106



Special Items, Operating Profit























15













15



Adjusted Operating Profit



$

1,202





$

142





$

(31)





$

(192)





$





$

1,121



Items Affecting Comparability





































Temporary relief from landlords





(9)







(2)

























(11)



Temporary relief from government agencies





(5)







(2)

























(7)



VAT deductions





(36)







(6)







(2)



















(44)



Amortization of reacquired franchise rights





2































2



F/X impact





57







11







(2)







(6)













60



Core Operating Profit (Loss)



$

1,211





$

143





$

(35)





$

(198)





$





$

1,121



 





Year Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



Company sales



$

7,120





$

1,939





$

51





$





$





$

9,110



Franchise fees and income





56







7







18



















81



Revenues from transactions with franchisees(2)





33







4







39







211













287



Other revenues





10







10







563







42







(534)







91



Total revenues



$

7,219





$

1,960





$

671





$

253





$

(534)





$

9,569



Company restaurant expenses





5,999







1,761







70













(1)







7,829



General and administrative expenses





254







110







46







184













594



Franchise expenses





29







4







1



















34



Expenses for transactions with franchisees(2)





30







3







35







211













279



Other operating costs and expenses





7







8







557







39







(533)







78



Closures and impairment expenses, net





16







4







12



















32



Other expenses (income), net





97



















(3)













94



Total costs and expenses, net





6,432







1,890







721







431







(534)







8,940



Operating Profit (Loss)



$

787





$

70





$

(50)





$

(178)





$





$

629



 

Reconciliation of GAAP Operating Profit to Restaurant Profit





Year Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

787





$

70





$

(50)





$

(178)





$





$

629



Less:





































Franchise fees and income





56







7







18



















81



Revenues from transactions with franchisees(2)





33







4







39







211













287



Other revenues





10







10







563







42







(534)







91



Add:





































General and administrative expenses





254







110







46







184













594



Franchise expenses





29







4







1



















34



Expenses for transactions with franchisees(2)





30







3







35







211













279



Other operating costs and expenses





7







8







557







39







(533)







78



Closures and impairment expenses, net





16







4







12



















32



Other expenses (income), net





97



















(3)













94



Restaurant profit (loss)



$

1,121





$

178





$

(19)





$





$

1





$

1,281



Company sales





7,120







1,939







51



















9,110



Restaurant margin %





15.7

%





9.2

%





(37.6)

%



N/A





N/A







14.1

%

 

Reconciliation of GAAP Operating Profit to Core Operating Profit





Year Ended 12/31/2022







KFC





Pizza Hut





All Other

Segments





Corporate

and

Unallocated(1)





Elimination





Total



GAAP Operating Profit (Loss)



$

787





$

70





$

(50)





$

(178)





$





$

629



Special Items, Operating Profit























4













4



Adjusted Operating Profit



$

787





$

70





$

(50)





$

(174)





$





$

633



Items Affecting Comparability





































Temporary relief from landlords





(32)







(6)







(1)



















(39)



Temporary relief from government agencies





(34)







(14)

























(48)



VAT deductions





(12)







(2)







(2)



















(16)



Amortization of reacquired franchise rights





97































97



F/X impact





































Core Operating Profit (Loss)



$

806





$

48





$

(53)





$

(174)





$





$

627



The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Statements of Income. 

(1)  Amounts have not been allocated to any segment for purpose of making operating decision or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature.

(2)  Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers to KFC and Pizza Hut restaurants, including franchisees.

 

Cision View original content:https://www.prnewswire.com/news-releases/yum-china-reports-fourth-quarter-results-increases-dividend-by-23-and-steps-up-2024-share-repurchases-to-1-25-billion-302054729.html

SOURCE Yum China Holdings, Inc.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsPress Releases
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!