Yum Brands Lays Out Yum China Separation Plans

Yum! Brands, Inc. YUM revealed its plans after the separation from China, which will happen at the close of the month. The company indicated its focus would be on three iconic global brands, boosting its franchise ownership and establish a leaner and most cost efficient structure.

The company is planning to spell out its plan during the annual investors' conference in New York to fuel growth of its KFC, Pizza Hut and Taco Bell brands. The food-chain firm expects to continue its capital return program and sees $13.5 billion to be returned between fourth quarter of 2015 and the year 2019. This included dividend payments.

Yum Brands' CEO Greg Creed said, "As a ‘pure play' franchisor, the transformed Yum! Brands will become more efficient and capital light with an optimized capital structure, improved cash flow and laser-like focus on our key strategies to drive same-store sales and new unit growth worldwide."

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As part of the plan, the restaurant firm would slash its annual CAPEX from $500 million in 2015 to an estimated level of $100 million in 2019. Similarly, the company expects a cumulative reduction of about $300 million in G&A in the same period.

Once the separation of China business is complete, Yum China Holdings, Inc. would be a licensee of Yum! Brands in China. The company would be provided with exclusive rights to KFC, Pizza Hut and Taco Bell. The company would also own the Little Sheep and East Dawning concepts.

The company indicated that Yum China would start trading on the NYSE under the symbol 'YUMC' from November 1.

In the pre-market trading, the stock gained $1.11, or 1.27 percent, to $88.50.