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Yum China Reports 6% Same-Store Sales Growth and 10% System Sales

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Yum China Reports 6% Same-Store Sales Growth and 10% System Sales Growth; Operating Profit Up 11% YoY; Board Declares Initial Dividend and Expands Share Repurchase Authorization

PR Newswire

SHANGHAI, Oct. 5, 2017 - Yum China Holdings, Inc. (the “Company” or “Yum China”) (NYSE: YUMC) today reported unaudited results for the third quarter ended August 31, 2017.

Third Quarter Highlights

  • Same-store sales grew 6%, including growth of 7% at KFC, flat at Pizza Hut.
  • Total system sales grew 10%, including growth of 11% at KFC and 7% at Pizza Hut, excluding foreign currency translation (“F/X”).
  • Opened 129 new restaurants during the quarter.
  • Total restaurant margin increased 0.8 percentage points to 20.0%, primarily driven by same-store sales leverage.
  • Operating profit increased 11%, and 13% excluding F/X, primarily driven by same-store sales growth. F/X negatively impacted reported operating profit by $5 million.
  • Basic EPS increased 4% to $0.55 and diluted EPS was flat at $0.53.
  • Effective tax rate was 31.7%, compared to 29.8% in the prior-year quarter, primarily due to higher costs of repatriating current year earnings into the U.S.
  • Net income increased 9% to $211 million..
  • Adjusted EBITDA increased 9% to $425 million.

Dividend and Share Repurchase

  • The Board of Directors has approved a regular quarterly cash dividend program, and declared an initial cash dividend of $0.10 per share on Yum China’s common stock.
  • The Board of Directors has increased Yum China’s existing share repurchase authorization from $300 million to an aggregate of $550 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Results

 














Third Quarter

 



Year to Date

 




% Change

 



% Change

 




System

Sales

 


Same-Store

Sales

 


Net New

Units

 


Operating

Profit

 



System

Sales

 


Same-Store

Sales

 


Net New

Units

 


Operating

Profit

 





















Yum China

 


+10

 


+6

 


+6

 


+11

 



+7

 


+4

 


+6

 


+23

 


KFC

 


+11

 


+7

 


+5

 


+20

 



+8

 


+4

 


+5

 


+20

 


Pizza Hut

 


+7

 


-

 


+8

 


-

 



+7

 


+1

 


+8

 


+37

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Third Quarter

 



Year to Date

 


(in US$ million, except

 









% Change

 











% Change

 


for per share data and percentages)

 

2017

 



2016

 



Reported

 


Ex F/X

 



2017

 



2016

 



Reported

 


Ex F/X

 


Reported Operating Profit

 

$

 

317

 



$

 

286

 



+11

 


+13

 



$

 

714

 



$

 

582

 



+23

 


+27

 


Operating Profit Before Special Items1

 

$

 

314

 



$

 

283

 



+11

 


+12

 



$

 

711

 



$

 

580

 



+23

 


+27

 


Net income

 

$

 

211

 



$

 

192

 



+9

 


+11

 



$

 

493

 



$

 

414

 



+19

 


+23

 


Adjusted EBITDA1

 

$

 

425

 



$

 

390

 



+9

 


+11

 



$

 

1,004

 



$

 

895

 



+12

 


+16

 


Basic EPS

 

$

 

0.55

 



$

 

0.53

 



+4

 


+6

 



$

 

1.28

 



$

 

1.14

 



+12

 


+16

 


Diluted EPS

 

$

 

0.53

 



$

 

0.53

 



-

 


+2

 



$

 

1.24

 



$

 

1.14

 



+9

 


+13

 


Diluted EPS Before Special Items1

 

$

 

0.52

 



$

 

0.52

 



-

 


+2

 



$

 

1.23

 



$

 

1.11

 



+11

 


+15

 



1See Reconciliation of Reported Results to Non-GAAP Measures included in the accompanying tables of this release for further details. 
Note: All comparisons are versus the same period a year ago. Consistent with prior years, Yum China’s fiscal third quarter includes June, July and August results. Percentages may not recompute due to rounding. 
System sales and same-store sales percentages exclude the impact of F/X.

 

 

CEO Comments

“We are pleased to report the third consecutive quarter of delivering positive same-store sales growth. With revenues exceeding $2 billion in the quarter, restaurant margin, operating profit and net income have all improved. We opened 129 new restaurants in the third quarter and we are on track to achieve our development target of 550-600 new stores in the year,” said Micky Pant, CEO of Yum China

“In this quarter, our strategic initiatives on digital and delivery continued to show encouraging development, which we believe will enable our long-term growth. The connection with our over 120 million loyalty members is getting stronger. The growth in mobile payments and cashless settlement methods for sales continued to outperform previous quarters. With over 5,100 restaurants across China offering delivery service, delivery contributed over 14% of company sales in the third quarter.

Given the strength of our business and our confidence in generating strong cash flows long term, our Board of Directors has approved a regular quarterly cash dividend program and authorized additional share repurchases.  These demonstrate our strong commitment to increase shareholder returns through disciplined capital allocation while simultaneously driving strong operating performance.

With our strong operating results in this third quarter and our commitment to return capital to shareholders, we believe we are well positioned to continue to increase shareholder value over the long run.”

New-Unit Development and Asset Upgrade

  • Opened 129 new restaurants during the third quarter, and 352 year to date.
  • Remodeled 200 restaurants during the third quarter, and 429 year to date, led by KFC.

 

 

 

 

 

 

 

 

 

 

 

 

 





New Units

 



Restaurant Count

 







Third

 





As of Third Quarter End

 







Quarter

 


Year to Date

 



2017

 



2016

 




Yum China

 



129

 


352

 




7,747

 




7,330

 




KFC

 



81

 


215

 




5,347

 




5,087

 




Pizza Hut

 



38

 


102

 




2,143

 




1,993

 




Little Sheep, East Dawning, Taco Bell

 



10

 


35

 




257

 



Number of visits: 65
Posted on Oct 05, 2017 - 10:35 PM • Print


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