SHANGHAI, Aug. 1, 2018 /PRNewswire/ -- Yum China Holdings,
Inc. (the "Company" or "Yum China")
(NYSE: YUMC) today reported unaudited results for the second
quarter ended June 30, 2018. Reported
GAAP results include Special Items, which are excluded from
adjusted measures. Special Items are not allocated to any
segment and therefore only impact reported GAAP results of
Yum China. See "Reconciliation
of Reported GAAP Results to Adjusted Measures" within this
release.
Second Quarter Highlights
- Total revenues increased 12% year over year to
$2.1 billion from $1.8 billion (5% year over year increase
excluding foreign currency translation ("F/X")).
- Total system sales grew 3% year over year, with
5% growth at KFC partially offset by 1% decline at Pizza Hut,
excluding F/X.
- Same-store sales declined 1% year over year, with flat
same-store sales at KFC and a 4% decrease at Pizza Hut, excluding
F/X.
- Restaurant margin was 15.1%, as compared with
16.6% in the prior year period.
- Operating Profit increased 13% year over
year to $193 million from
$171 million (5% year over year
increase excluding F/X).
- Net Income increased 14% to $143 million from $125
million in the prior year period (6% year over year increase
excluding F/X).
- Effective tax rate was 26.0%.
- Diluted EPS was $0.36, as compared with $0.31 in the prior year period.
- Repurchased approximately 1.9 million shares for $73.4 million at an average price of $38.41 per share.
- Opened 164 new restaurants during the quarter, bringing total
store count to 8,198 across more than 1,200 cities.
Digital and Delivery
- As of June 30, 2018, the KFC
loyalty program had more than 135 million members and the Pizza Hut
loyalty program had over 45 million members, an increase of 50
million and 20 million, respectively, year over year.
- Mobile payments accounted for approximately 63% of Company
sales in the quarter, an increase of 21 percentage points year over
year.
- Delivery contributed to 16% of Company sales in the second
quarter of 2018, an increase of 3 percentage points year over year.
Delivery services now available in over 1,000 cities, up from 800
cities in the prior year period.
Key Financial Results
|
|
Second Quarter
2018
|
|
|
Year to Date Ended
6/30/2018
|
|
%
Change
|
|
|
%
Change
|
|
System
|
|
Same-
Store
|
|
Net New
Units
|
|
Operating
|
|
System
|
|
Same-
Store
|
|
Net New
Units
|
|
Operating
|
|
Sales
|
Sales
|
|
|
Profit
|
Sales
|
Sales
|
|
|
Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yum China
|
+3
|
(1)
|
|
+6
|
|
+13
|
+5
|
+1
|
|
+6
|
|
+26
|
KFC
|
+5
|
-
|
|
+7
|
|
+10
|
+7
|
+3
|
|
+7
|
|
+16
|
Pizza Hut
|
(1)
|
(4)
|
|
+4
|
|
(49)
|
(1)
|
(5)
|
|
+4
|
|
(55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
Year to Date Ended
6/30
|
(in US$ million,
except
|
|
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
%
Change
|
for per share data
and percentages)
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
Operating
Profit
|
|
$
|
193
|
|
$
|
171
|
|
+13
|
|
+5
|
|
$
|
588
|
|
$
|
467
|
|
+26
|
|
+16
|
Adjusted Operating
Profit1
|
|
$
|
193
|
|
$
|
171
|
|
+13
|
|
+5
|
|
$
|
490
|
|
$
|
467
|
|
+5
|
|
(3)
|
Net Income
|
|
$
|
143
|
|
$
|
125
|
|
+14
|
|
+6
|
|
$
|
431
|
|
$
|
329
|
|
+31
|
|
+20
|
Basic Earnings Per
Common Share
|
|
$
|
0.37
|
|
$
|
0.32
|
|
+16
|
|
+6
|
|
$
|
1.12
|
|
$
|
0.85
|
|
+32
|
|
+20
|
Adjusted Basic EPS
Per Common Share1
|
|
$
|
0.37
|
|
$
|
0.32
|
|
+16
|
|
+6
|
|
$
|
0.93
|
|
$
|
0.85
|
|
+9
|
|
(1)
|
Diluted Earnings Per
Common Share
|
|
$
|
0.36
|
|
$
|
0.31
|
|
+16
|
|
+6
|
|
$
|
1.08
|
|
$
|
0.83
|
|
+30
|
|
+19
|
Adjusted Diluted EPS
Per Common Share1
|
|
$
|
0.36
|
|
$
|
0.31
|
|
+16
|
|
+6
|
|
$
|
0.89
|
|
$
|
0.83
|
|
+7
|
|
(1)
|
1
See "Reconciliation of Reported GAAP Results
to Adjusted Measures" included in the accompanying tables of
this release for further details.
|
Note:
All comparisons are versus the same period a year
ago.
|
NM refers to changes
over 100%, from negative to positive amounts or from zero to an
amount.
|
Yum China's fiscal
second quarter 2018 includes April, May and June
results.
|
Percentages may not
recompute due to rounding.
|
System sales and
same-store sales percentages exclude the impact of F/X.
|
Prior period results
have been recast for the change of fiscal quarter, same-store sales
growth definition and adoption of the new revenue accounting
standard.
|
CEO and CFO Comments
"KFC achieved 5% system sales growth in the second quarter as a
result of solid business fundamentals and accelerated new store
development. We are on track to add 600-650 new stores, led
by KFC, by the end of the year. This growth strategy will set
us up for long-term growth in both profitability and market
share. We are confident in the sustainability of KFC's leader
position in the QSR market in China. While Pizza Hut
continued to face challenges in China's competitive casual dining
space, we added new talent to our team and made progress
repositioning the brand with our target customers. We remain
dedicated to revitalizing the brand and strongly believe that our
initiatives including delivering more innovative products and
introducing new store formats will restore the brand to the level
of consistent growth that our shareholders expect," said
Joey Wat, CEO of Yum China.
"Yum China reported total
revenues and operating profit growth of 12% and 13% respectively in
the second quarter. We will continue to invest in strengthening our
core competencies as well as building delivery, digital and data
capabilities to capture online and offline opportunities and drive
future growth," added Ms. Wat.
"In an increasingly competitive environment, we stepped up food
investment and promotional activities, which inevitably had some
pressure on our margins. This reflects our strategic decision to
invest in our brands for long-term market share gain. Our business
continues to generate substantial free cash flow, and during the
second quarter, we returned over $110
million of cash to our shareholders through share buyback
and dividends. We remain committed to creating enduring value for
our stockholders," remarked Jacky
Lo, CFO of Yum
China.
Dividend and Share Repurchase
- The Board of Directors declared a cash dividend of $0.10 per share on Yum
China's common stock, payable as of the close of business on
September 19, 2018 to stockholders of
record as of the close of business on August
29, 2018.
- During the second quarter, we repurchased approximately 1.9
million shares of Yum China common
stock for $73.4 million at an average
price of $38.41 per share.
New-Unit Development and Asset Upgrade
- The Company opened 164 new restaurants and remodeled 365
restaurants in the second quarter of 2018.
|
|
|
|
New
Units
|
Restaurant
Count
|
|
|
|
|
|
Second Quarter
2018
|
Year to Date
Ended 6/30/2018
|
As of
6/30
|
|
|
|
|
|
2018
|
|
2017
|
|
|
Yum China
|
|
|
164
|
|
|
367
|
|
8,198
|
|
7,704
|
|
|
KFC
|
|
|
128
|
|
|
272
|
|
5,696
|
|
5,324
|
|
|
Pizza Hut
|
|
|
27
|
|
|
68
|
|
2,209
|
|
2,122
|
|
|
Little Sheep, East
Dawning, Taco Bell
|
|
|
9
|
|
|
27
|
|
293
|
|
258
|
|
Restaurant Margin
- In the second quarter of 2018, Yum
China restaurant margin was 15.1%, as compared with 16.6% in
the prior year period, primarily attributable to Pizza Hut sales
deleverage and investment in product upgrades and promotions for
both KFC and Pizza Hut.
|
|
|
Second
Quarter
|
|
|
|
Year to Date Ended
6/30
|
|
|
|
|
2018
|
|
|
2017
|
|
|
%
pts
change
|
|
|
|
2018
|
|
2017
|
|
%
pts
change
|
|
|
Yum China
|
|
|
15.1
|
%
|
|
|
16.6
|
%
|
|
|
(1.5)
|
|
|
|
16.6%
|
|
18.5%
|
|
(1.9)
|
|
|
KFC
|
|
|
16.8
|
%
|
|
|
17.5
|
%
|
|
(0.7)
|
|
|
|
18.9%
|
|
19.2%
|
|
(0.3)
|
|
|
Pizza Hut
|
|
|
11.2
|
%
|
|
|
14.9
|
%
|
|
|
(3.7)
|
|
|
|
10.8%
|
|
17.4%
|
|
(6.6)
|
|
Conference Call
Yum China Holdings, Inc. will host a conference call to review
the Company's financial performance and strategies at
8:00 p.m. US Eastern Time on
Wednesday, August 1, 2018
(8:00 a.m. Beijing/HK time on Thursday, August 2, 2018). A copy of the
presentation will be available on the Yum China Holdings, Inc.
website, http://ir.yumchina.com
US:
|
|
+1-845-675-0437
|
Hong Kong:
|
|
+852-3018-6771
|
Mainland
China:
|
|
400-620-8038 or
800-819-0121
|
UK:
|
|
+44 20
36214779
|
International:
|
|
+65-6713-5090
|
Passcode:
|
|
Yum China
|
A replay of the conference call may be accessed by phone at the
following numbers until Thursday August 9,
2018:
US:
|
|
+1-855-452-5696
|
International:
|
|
+61-2-8199-0299
|
Passcode:
|
|
6146028
|
The webcast and the playback can be accessed via the internet by
visiting the Yum China Holdings, Inc. website,
http://ir.yumchina.com
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. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as "expect,"
"expectation," "believe," "anticipate," "may," "could," "intend,"
"belief," "plan," "estimate," "target," "predict," "project,"
"likely," "will," "continue," "should," "forecast," "outlook" or
similar terminology. These statements are based on current
estimates and assumptions made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that we believe are
appropriate and reasonable under the circumstances, but there can
be no assurance that such estimates and assumptions will prove to
be correct. Forward-looking statements include, without limitation,
statements regarding the future business plans, earnings and
performance of Yum China, statements
regarding the revitalization of Pizza Hut, anticipated effects of
population and macroeconomic trends, statements regarding the
capital structure of Yum China, 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,
our ability to control costs and expenses, including tax costs, as
well as changes in political, economic and regulatory conditions in
China. In addition, other risks
and uncertainties not presently known to us or that we currently
believe to be immaterial could affect the accuracy of any such
forward-looking statements. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.
You should consult our filings with the Securities and Exchange
Commission (including the information set forth under the captions
"Risk Factors" and "Forward-Looking Statements" in our Annual
Report on Form 10-K) for additional detail about factors that could
affect our financial and other results.
About Yum China Holdings, Inc.
Yum China Holdings, Inc. is a licensee of Yum! Brands in
mainland China. It has exclusive rights in mainland China to KFC,
China's leading quick-service restaurant brand, Pizza Hut, the
leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving
innovative Mexican-inspired food. Yum
China also owns the Little Sheep and East Dawning concepts
outright. The Company had more than 8,100 restaurants and more than
460,000 employees in over 1,200 cities at the end of June 2018. For more information, please visit
http://ir.yumchina.com
Investor Relations
Contacts:
|
|
|
Tel: +86 21 2407
7556
IR@YumChina.com
|
|
|
|
Media
Contact:
|
|
|
Tel: +86 21 2407
7510
Media@YumChina.com
|
Yum China
Holdings, Inc.
|
Consolidated
Statements of Income
|
(amounts in US$
million, except for per share amounts)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
% Change
|
|
Year to Date
Ended
|
|
|
% Change
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
1,888
|
|
|
$
|
1,664
|
|
|
|
13
|
|
|
|
$
|
3,904
|
|
|
$
|
3,402
|
|
|
|
15
|
|
|
Franchise fees and
income
|
|
|
34
|
|
|
|
33
|
|
|
|
2
|
|
|
|
|
74
|
|
|
|
69
|
|
|
|
7
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
141
|
|
|
|
141
|
|
|
|
—
|
|
|
|
|
302
|
|
|
|
288
|
|
|
|
5
|
|
|
Other
revenues
|
|
|
5
|
|
|
|
3
|
|
|
|
79
|
|
|
|
|
9
|
|
|
|
8
|
|
|
|
15
|
|
|
Total
revenues
|
|
|
2,068
|
|
|
|
1,841
|
|
|
|
12
|
|
|
|
|
4,289
|
|
|
|
3,767
|
|
|
|
14
|
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
571
|
|
|
|
483
|
|
|
|
(18)
|
|
|
|
|
1,165
|
|
|
|
969
|
|
|
|
(20)
|
|
|
Payroll and employee
benefits
|
|
|
424
|
|
|
|
366
|
|
|
|
(16)
|
|
|
|
|
866
|
|
|
|
734
|
|
|
|
(18)
|
|
|
Occupancy and other
operating expenses
|
|
|
607
|
|
|
|
539
|
|
|
|
(13)
|
|
|
|
|
1,226
|
|
|
|
1,069
|
|
|
|
(15)
|
|
|
Company restaurant
expenses
|
|
|
1,602
|
|
|
|
1,388
|
|
|
|
(15)
|
|
|
|
|
3,257
|
|
|
|
2,772
|
|
|
|
(18)
|
|
|
General and
administrative expenses
|
|
|
101
|
|
|
|
118
|
|
|
|
16
|
|
|
|
|
215
|
|
|
|
216
|
|
|
|
1
|
|
|
Franchise
expenses
|
|
|
17
|
|
|
|
17
|
|
|
|
—
|
|
|
|
|
37
|
|
|
|
35
|
|
|
|
(6)
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
138
|
|
|
|
137
|
|
|
|
(1)
|
|
|
|
|
298
|
|
|
|
284
|
|
|
|
(5)
|
|
|
Other operating
costs
|
|
|
7
|
|
|
|
3
|
|
|
NM
|
|
|
|
|
11
|
|
|
|
6
|
|
|
|
(67)
|
|
|
Closures and
impairment expenses, net
|
|
|
17
|
|
|
|
18
|
|
|
|
7
|
|
|
|
|
16
|
|
|
|
18
|
|
|
|
15
|
|
|
Other income,
net
|
|
|
(7)
|
|
|
|
(11)
|
|
|
|
44
|
|
|
|
|
(133)
|
|
|
|
(31)
|
|
|
NM
|
|
|
Total costs and
expenses, net
|
|
|
1,875
|
|
|
|
1,670
|
|
|
|
(12)
|
|
|
|
|
3,701
|
|
|
|
3,300
|
|
|
|
(12)
|
|
|
Operating
Profit
|
|
|
193
|
|
|
|
171
|
|
|
|
13
|
|
|
|
|
588
|
|
|
|
467
|
|
|
|
26
|
|
|
Interest income,
net
|
|
|
10
|
|
|
|
4
|
|
|
NM
|
|
|
|
|
18
|
|
|
|
8
|
|
|
NM
|
|
|
Income Before
Income Taxes
|
|
|
203
|
|
|
|
175
|
|
|
|
16
|
|
|
|
|
606
|
|
|
|
475
|
|
|
|
28
|
|
|
Income tax
provision
|
|
|
(53)
|
|
|
|
(43)
|
|
|
|
(24)
|
|
|
|
|
(160)
|
|
|
|
(133)
|
|
|
|
(21)
|
|
|
Net income –
including noncontrolling interests
|
|
|
150
|
|
|
|
132
|
|
|
|
13
|
|
|
|
|
446
|
|
|
|
342
|
|
|
|
30
|
|
|
Net income –
noncontrolling interests
|
|
|
7
|
|
|
|
7
|
|
|
|
(2)
|
|
|
|
|
15
|
|
|
|
13
|
|
|
|
10
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
|
143
|
|
|
$
|
125
|
|
|
|
14
|
|
|
|
$
|
431
|
|
|
$
|
329
|
|
|
|
31
|
|
|
Effective tax
rate
|
|
|
26.0
|
%
|
|
|
24.3
|
%
|
|
|
(1.7)
|
|
ppts.
|
|
|
26.4
|
%
|
|
|
27.9
|
%
|
|
|
1.5
|
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.37
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
$
|
1.12
|
|
|
0.85
|
|
|
|
|
|
|
Weighted average
shares outstanding (in millions)
|
|
|
386
|
|
|
|
387
|
|
|
|
|
|
|
|
|
386
|
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Common Share
|
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
$
|
1.08
|
|
|
0.83
|
|
|
|
|
|
|
Weighted average
shares outstanding (in millions)
|
|
|
398
|
|
|
|
399
|
|
|
|
|
|
|
|
|
400
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
0.20
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
30.3
|
|
|
|
29.0
|
|
|
|
(1.3)
|
|
ppts.
|
|
|
29.8
|
|
|
|
28.5
|
|
|
|
(1.3)
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
22.5
|
|
|
|
22.0
|
|
|
|
(0.5)
|
|
ppts.
|
|
|
22.2
|
|
|
|
21.6
|
|
|
|
(0.6)
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
32.1
|
|
|
|
32.4
|
|
|
|
0.3
|
|
ppts.
|
|
|
31.4
|
|
|
|
31.4
|
|
|
|
—
|
|
ppts.
|
Restaurant
margin
|
|
|
15.1
|
%
|
|
|
16.6
|
%
|
|
|
(1.5)
|
|
ppts.
|
|
|
16.6
|
%
|
|
|
18.5
|
%
|
|
|
(1.9)
|
|
ppts.
|
Operating
margin
|
|
|
10.2
|
%
|
|
|
10.3
|
%
|
|
|
(0.1)
|
|
ppts.
|
|
|
15.1
|
%
|
|
|
13.7
|
%
|
|
|
1.4
|
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
% Change
|
|
Year to Date
Ended
|
|
|
% Change
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
1,352
|
|
|
$
|
1,159
|
|
|
|
17
|
|
|
|
$
|
2,796
|
|
|
$
|
2,358
|
|
|
|
19
|
|
|
Franchise fees and
income
|
|
|
33
|
|
|
|
32
|
|
|
|
1
|
|
|
|
|
70
|
|
|
|
66
|
|
|
|
5
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
15
|
|
|
|
15
|
|
|
|
(1)
|
|
|
|
|
32
|
|
|
|
32
|
|
|
|
—
|
|
|
Total
revenues
|
|
|
1,400
|
|
|
|
1,206
|
|
|
|
16
|
|
|
|
|
2,898
|
|
|
|
2,456
|
|
|
|
18
|
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
413
|
|
|
|
348
|
|
|
|
(19)
|
|
|
|
|
837
|
|
|
|
701
|
|
|
|
(19)
|
|
|
Payroll and employee
benefits
|
|
|
289
|
|
|
|
241
|
|
|
|
(20)
|
|
|
|
|
582
|
|
|
|
482
|
|
|
|
(21)
|
|
|
Occupancy and other
operating expenses
|
|
|
423
|
|
|
|
367
|
|
|
|
(15)
|
|
|
|
|
849
|
|
|
|
723
|
|
|
|
(17)
|
|
|
Company restaurant
expenses
|
|
|
1,125
|
|
|
|
956
|
|
|
|
(18)
|
|
|
|
|
2,268
|
|
|
|
1,906
|
|
|
|
(19)
|
|
|
General and
administrative expenses
|
|
|
45
|
|
|
|
38
|
|
|
|
(13)
|
|
|
|
|
91
|
|
|
|
77
|
|
|
|
(16)
|
|
|
Franchise
expenses
|
|
|
17
|
|
|
|
17
|
|
|
|
2
|
|
|
|
|
36
|
|
|
|
34
|
|
|
|
(5)
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
15
|
|
|
|
15
|
|
|
|
1
|
|
|
|
|
32
|
|
|
|
32
|
|
|
|
—
|
|
|
Closures and
impairment expenses, net
|
|
|
6
|
|
|
|
9
|
|
|
|
43
|
|
|
|
|
6
|
|
|
|
10
|
|
|
|
44
|
|
|
Other income,
net
|
|
|
(7)
|
|
|
|
(11)
|
|
|
|
(40)
|
|
|
|
|
(30)
|
|
|
|
(30)
|
|
|
|
(2)
|
|
|
Total costs and
expenses, net
|
|
|
1,201
|
|
|
|
1,024
|
|
|
|
(17)
|
|
|
|
|
2,403
|
|
|
|
2,029
|
|
|
|
(18)
|
|
|
Operating
Profit
|
|
$
|
199
|
|
|
$
|
182
|
|
|
|
10
|
|
|
|
$
|
495
|
|
|
$
|
427
|
|
|
|
16
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
30.5
|
|
|
|
30.1
|
|
|
|
(0.4)
|
|
ppts.
|
|
|
29.9
|
|
|
|
29.7
|
|
|
|
(0.2)
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
21.4
|
|
|
|
20.8
|
|
|
|
(0.6)
|
|
ppts.
|
|
|
20.8
|
|
|
|
20.4
|
|
|
|
(0.4)
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
31.3
|
|
|
|
31.6
|
|
|
|
0.3
|
|
ppts.
|
|
|
30.4
|
|
|
|
30.7
|
|
|
|
0.3
|
|
ppts.
|
Restaurant
margin
|
|
|
16.8
|
%
|
|
|
17.5
|
%
|
|
|
(0.7)
|
|
ppts.
|
|
|
18.9
|
%
|
|
|
19.2
|
%
|
|
|
(0.3)
|
|
ppts.
|
Operating
margin
|
|
|
14.7
|
%
|
|
|
15.6
|
%
|
|
|
(0.9)
|
|
ppts.
|
|
|
17.7
|
%
|
|
|
18.1
|
%
|
|
|
(0.4)
|
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
Pizza Hut
Operating Results
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
% Change
|
|
Year to Date
Ended
|
|
|
% Change
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
528
|
|
|
$
|
497
|
|
|
|
6
|
|
|
|
$
|
1,092
|
|
|
$
|
1,024
|
|
|
|
7
|
|
|
Franchise fees and
income
|
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
24
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
—
|
|
|
|
1
|
|
|
|
5
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(1)
|
|
|
Total
revenues
|
|
|
528
|
|
|
|
498
|
|
|
|
6
|
|
|
|
|
1,093
|
|
|
|
1,026
|
|
|
|
7
|
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
156
|
|
|
|
132
|
|
|
|
(18)
|
|
|
|
|
323
|
|
|
|
261
|
|
|
|
(24)
|
|
|
Payroll and employee
benefits
|
|
|
133
|
|
|
|
122
|
|
|
|
(9)
|
|
|
|
|
280
|
|
|
|
246
|
|
|
|
(14)
|
|
|
Occupancy and other
operating expenses
|
|
|
181
|
|
|
|
169
|
|
|
|
(7)
|
|
|
|
|
371
|
|
|
|
339
|
|
|
|
(9)
|
|
|
Company restaurant
expenses
|
|
|
470
|
|
|
|
423
|
|
|
|
(11)
|
|
|
|
|
974
|
|
|
|
846
|
|
|
|
(15)
|
|
|
General and
administrative expenses
|
|
|
28
|
|
|
|
26
|
|
|
|
(6)
|
|
|
|
|
56
|
|
|
|
51
|
|
|
|
(10)
|
|
|
Franchise
expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
(65)
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
(42)
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
—
|
|
|
|
1
|
|
|
|
(5)
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
Closures and
impairment expenses, net
|
|
|
11
|
|
|
|
9
|
|
|
|
(34)
|
|
|
|
|
10
|
|
|
|
8
|
|
|
|
(22)
|
|
|
Other income,
net
|
|
|
(1)
|
|
|
|
—
|
|
|
NM
|
|
|
|
|
(2)
|
|
|
|
—
|
|
|
NM
|
|
|
Total costs and
expenses, net
|
|
|
508
|
|
|
|
459
|
|
|
|
(11)
|
|
|
|
|
1,039
|
|
|
|
907
|
|
|
|
(15)
|
|
|
Operating
Profit
|
|
$
|
20
|
|
|
$
|
39
|
|
|
|
(49)
|
|
|
|
$
|
54
|
|
|
$
|
119
|
|
|
|
(55)
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
29.5
|
|
|
|
26.5
|
|
|
|
(3.0)
|
|
ppts.
|
|
|
29.6
|
|
|
|
25.5
|
|
|
|
(4.1)
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
25.2
|
|
|
|
24.5
|
|
|
|
(0.7)
|
|
ppts.
|
|
|
25.7
|
|
|
|
24.0
|
|
|
|
(1.7)
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
34.1
|
|
|
|
34.1
|
|
|
|
—
|
|
ppts.
|
|
|
33.9
|
|
|
|
33.1
|
|
|
|
(0.8)
|
|
ppts.
|
Restaurant
margin
|
|
|
11.2
|
%
|
|
|
14.9
|
%
|
|
|
(3.7)
|
|
ppts.
|
|
|
10.8
|
%
|
|
|
17.4
|
%
|
|
|
(6.6)
|
|
ppts.
|
Operating
margin
|
|
|
3.9
|
%
|
|
|
8.0
|
%
|
|
|
(4.1)
|
|
ppts.
|
|
|
4.9
|
%
|
|
|
11.7
|
%
|
|
|
(6.8)
|
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
Consolidated
Balance Sheets
|
(amounts in US$
million)
|
(unaudited)
|
|
|
|
6/30/2018
|
|
|
12/31/2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,261
|
|
|
$
|
1,059
|
|
Short-term
investments
|
|
|
278
|
|
|
|
205
|
|
Accounts receivable,
net
|
|
|
73
|
|
|
|
81
|
|
Inventories,
net
|
|
|
276
|
|
|
|
297
|
|
Prepaid expenses and
other current assets
|
|
|
205
|
|
|
|
160
|
|
Total Current
Assets
|
|
|
2,093
|
|
|
|
1,802
|
|
Property, plant and
equipment, net
|
|
|
1,657
|
|
|
|
1,691
|
|
Goodwill
|
|
|
276
|
|
|
|
108
|
|
Intangible assets,
net
|
|
|
145
|
|
|
|
101
|
|
Investments in
unconsolidated affiliates
|
|
|
53
|
|
|
|
95
|
|
Other
assets
|
|
|
421
|
|
|
|
385
|
|
Deferred income
taxes
|
|
|
85
|
|
|
|
105
|
|
Total
Assets
|
|
|
4,730
|
|
|
|
4,287
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
|
1,147
|
|
|
|
985
|
|
Income taxes
payable
|
|
|
59
|
|
|
|
39
|
|
Total Current
Liabilities
|
|
|
1,206
|
|
|
|
1,024
|
|
Capital lease
obligations
|
|
|
27
|
|
|
|
28
|
|
Other liabilities and
deferred credits
|
|
|
396
|
|
|
|
388
|
|
Total
Liabilities
|
|
|
1,629
|
|
|
|
1,440
|
|
Redeemable
Noncontrolling Interest
|
|
|
5
|
|
|
|
5
|
|
Equity
|
|
|
|
|
|
|
|
|
Common stock, $0.01
par value; 1,000 million shares authorized;
391
million shares and 389 million shares issued at June 30,
2018
and
December 31, 2017, respectively; 385 million shares and 385 million
shares
outstanding at June 30, 2018 and December 31, 2017,
respectively
|
|
|
4
|
|
|
|
4
|
|
Treasury
stock
|
|
|
(221)
|
|
|
|
(148)
|
|
Additional paid-in
capital
|
|
|
2,388
|
|
|
|
2,375
|
|
Retained
earnings
|
|
|
751
|
|
|
|
397
|
|
Accumulated other
comprehensive income
|
|
|
81
|
|
|
|
137
|
|
Total Equity – Yum
China Holdings, Inc.
|
|
|
3,003
|
|
|
|
2,765
|
|
Noncontrolling
interests
|
|
|
93
|
|
|
|
77
|
|
Total
Equity
|
|
|
3,096
|
|
|
|
2,842
|
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
|
4,730
|
|
|
$
|
4,287
|
|
|
|
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Consolidated
Statements of Cash Flows
|
(amounts in US$
million)
|
(unaudited)
|
|
|
Year to Date
Ended
|
|
|
6/30/2018
|
|
6/30/2017
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
|
$
|
446
|
|
|
|
$
|
342
|
|
|
Depreciation and
amortization
|
|
|
235
|
|
|
|
|
196
|
|
|
Closures and
impairment expenses
|
|
|
16
|
|
|
|
|
18
|
|
|
Gain from
re-measurement of equity interest upon acquisition
|
|
|
(98)
|
|
|
|
|
—
|
|
|
Deferred income
taxes
|
|
|
42
|
|
|
|
|
(3)
|
|
|
Equity income from
investments in unconsolidated affiliates
|
|
|
(35)
|
|
|
|
|
(35)
|
|
|
Distributions
received from unconsolidated affiliates
|
|
|
41
|
|
|
|
|
31
|
|
|
Share-based
compensation
|
|
|
13
|
|
|
|
|
11
|
|
|
Changes in accounts
receivable
|
|
|
(2)
|
|
|
|
|
12
|
|
|
Changes in
inventories
|
|
|
18
|
|
|
|
|
(3)
|
|
|
Changes in prepaid
expenses and other current assets
|
|
|
(28)
|
|
|
|
|
(1)
|
|
|
Changes in accounts
payable and other current liabilities
|
|
|
182
|
|
|
|
|
46
|
|
|
Changes in income
taxes payable
|
|
|
20
|
|
|
|
|
20
|
|
|
Other, net
|
|
|
(31)
|
|
|
|
|
(30)
|
|
|
Net Cash Provided
by Operating Activities
|
|
|
819
|
|
|
|
|
604
|
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Capital
spending
|
|
|
(230)
|
|
|
|
|
(204)
|
|
|
Purchases of
short-term investments
|
|
|
(370)
|
|
|
|
|
(318)
|
|
|
Maturities of
short-term investments
|
|
|
295
|
|
|
|
|
81
|
|
|
Proceeds from
refranchising of restaurants
|
|
|
3
|
|
|
|
|
3
|
|
|
Acquisition of
business, net of cash acquired
|
|
|
(88)
|
|
|
|
|
(25)
|
|
|
Other, net
|
|
|
(16)
|
|
|
|
|
(2)
|
|
|
Net Cash Used in
Investing Activities
|
|
|
(406)
|
|
|
|
|
(465)
|
|
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Payment of capital
lease obligation
|
|
|
(1)
|
|
|
|
|
(1)
|
|
|
Repayment of
short-term borrowings assumed from acquisition
|
|
|
(10)
|
|
|
|
|
—
|
|
|
Repurchase of shares
of common stock
|
|
|
(70)
|
|
|
|
|
(96)
|
|
|
Proceeds from
exercise of stock options
|
|
|
—
|
|
|
|
|
4
|
|
|
Cash dividends
paid
|
|
|
(77)
|
|
|
|
|
—
|
|
|
Dividends paid to
noncontrolling interests
|
|
|
(27)
|
|
|
|
|
(17)
|
|
|
Other, net
|
|
|
(1)
|
|
|
|
|
—
|
|
|
Net Cash Used in
Financing Activities
|
|
|
(186)
|
|
|
|
|
(110)
|
|
|
Effect of Exchange
Rates on Cash and Cash Equivalents
|
|
|
(25)
|
|
|
|
|
12
|
|
|
Net Increase in
Cash and Cash Equivalents
|
|
|
202
|
|
|
|
|
41
|
|
|
Cash and Cash
Equivalents - Beginning of Period
|
|
|
1,059
|
|
|
|
|
885
|
|
|
Cash and Cash
Equivalents - End of Period
|
|
$
|
1,261
|
|
|
|
$
|
926
|
|
|
Reconciliation of Reported GAAP Results to Adjusted
Measures
(amounts in US$ million, except for per
share amounts)
(unaudited)
In this press release:
- The Company provides certain percentage changes 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, franchise and
unconsolidated affiliate 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 and
unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at a rate of approximately 6% of
system sales. Franchise and unconsolidated affiliate restaurant
sales are not included in Company sales on the 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. 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, 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.
Prior period results have been recast accordingly.
- Company Restaurant profit ("Restaurant profit") is defined as
Company sales less expenses incurred directly by our Company-owned
restaurants in generating Company sales. Company restaurant margin
percentage is defined as Restaurant profit divided by Company
sales.
In addition to the results provided in accordance with US
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides measures adjusted for Special Items,
which include Adjusted Operating Profit, Adjusted Diluted Earnings
Per Common Share, Adjusted Effective Tax Rate and Adjusted EBITDA,
which we define as net income including noncontrolling interests
adjusted for income tax, interest income, depreciation,
amortization and other items, including store impairment charges.
The Special Item for the year to date ended June 30, 2018 represents a gain recognized from
the re-measurement of our previously held equity interest in Wuxi
KFC at fair value upon acquisition, as described in the
accompanying notes. The Company excludes impact from Special Items
for the purpose of evaluating performance internally. Special Items
are not included in any of our segment results. In addition, the
Company provides Adjusted EBITDA because we believe that investors
and analysts may find it useful in measuring operating performance
without regard to items such as income tax, interest income,
depreciation, amortization and other items, including store
impairment charges. These adjusted 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 adjusted measures provide 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 ongoing operations due to its nature. These
adjusted measures should not be considered in isolation or as a
substitute for GAAP financial results, but should be read in
conjunction with the unaudited Consolidated Statements of Income
and other information presented herein. A reconciliation of the
most directly comparable GAAP measures to adjusted measures
follows.
|
|
Quarter
Ended
|
|
|
Year to Date
Ended
|
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
Detail of Special
Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from
re-measurement of equity interest upon
acquisition(b)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
—
|
|
Special Items Income
- Operating Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
98
|
|
|
|
—
|
|
Tax Expenses on
Special Items(c)
|
|
|
—
|
|
|
|
—
|
|
|
|
(24)
|
|
|
|
—
|
|
Special Items Income,
net of tax – including noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
|
74
|
|
|
|
—
|
|
Special Items Income,
net of tax – noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Special Items Income,
net of tax –Yum China Holdings, Inc.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
74
|
|
|
$
|
—
|
|
Weighted Average
Diluted Shares Outstanding
|
|
|
398
|
|
|
|
399
|
|
|
|
400
|
|
|
|
397
|
|
Special Items Diluted
Earnings Per Common Share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.19
|
|
|
$
|
—
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
193
|
|
|
$
|
171
|
|
|
$
|
588
|
|
|
$
|
467
|
|
Special Items Income
- Operating Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
98
|
|
|
|
—
|
|
Adjusted Operating
Profit
|
|
$
|
193
|
|
|
$
|
171
|
|
|
$
|
490
|
|
|
$
|
467
|
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
$
|
1.08
|
|
|
$
|
0.83
|
|
Special Items Diluted
Earnings Per Common Share
|
|
|
—
|
|
|
|
—
|
|
|
|
0.19
|
|
|
|
—
|
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
$
|
0.89
|
|
|
$
|
0.83
|
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
|
26.0
|
%
|
|
|
24.3
|
%
|
|
|
26.4
|
%
|
|
|
27.9
|
%
|
Impact on Effective
Tax Rate as a result of Special Items
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
(0.2)
|
%
|
|
|
—
|
%
|
Adjusted Effective
Tax Rate
|
|
|
26.0
|
%
|
|
|
24.3
|
%
|
|
|
26.6
|
%
|
|
|
27.9
|
%
|
Reconciliation
of Net Income to Adjusted EBITDA
|
(amounts in US$
million)
|
(unaudited)
|
Net income, along
with the reconciliation to Adjusted EBITDA, is presented
below.
|
|
|
|
Quarter
Ended
|
|
|
Year to Date
Ended
|
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
|
6/30/2018
|
|
|
6/30/2017
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
|
143
|
|
|
$
|
125
|
|
|
$
|
431
|
|
|
$
|
329
|
|
Net income –
noncontrolling interests
|
|
|
7
|
|
|
|
7
|
|
|
|
15
|
|
|
|
13
|
|
Income tax
provision
|
|
|
53
|
|
|
|
43
|
|
|
|
160
|
|
|
|
133
|
|
Interest income,
net
|
|
|
(10)
|
|
|
|
(4)
|
|
|
|
(18)
|
|
|
|
(8)
|
|
Operating
Profit
|
|
|
193
|
|
|
|
171
|
|
|
|
588
|
|
|
|
467
|
|
Depreciation and
amortization
|
|
|
117
|
|
|
|
100
|
|
|
|
235
|
|
|
|
196
|
|
Store impairment
charges
|
|
|
19
|
|
|
|
19
|
|
|
|
21
|
|
|
|
23
|
|
Special Items Income
- Operating Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
(98)
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
329
|
|
|
$
|
290
|
|
|
$
|
746
|
|
|
$
|
686
|
|
Unit Count by
Brand
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KFC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2017
|
|
New Builds
|
|
Acquired
|
|
Closures
|
|
Refranchised
|
|
Others
|
|
6/30/2018
|
Company-owned
|
4,112
|
|
205
|
|
1
|
|
(48)
|
|
(6)
|
|
157
|
|
4,421
|
Unconsolidated
affiliates
|
891
|
|
61
|
|
—
|
|
(11)
|
|
—
|
|
(157)
|
|
784
|
Franchise
|
485
|
|
6
|
|
(1)
|
|
(5)
|
|
6
|
|
—
|
|
491
|
Total
|
5,488
|
|
272
|
|
—
|
|
(64)
|
|
—
|
|
—
|
|
5,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pizza
Hut
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2017
|
|
New Builds
|
|
|
|
Closures
|
|
Refranchised
|
|
|
|
6/30/2018
|
Company-owned
|
2,166
|
|
67
|
|
|
|
(53)
|
|
(1)
|
|
|
|
2,179
|
Franchise
|
29
|
|
1
|
|
|
|
(1)
|
|
1
|
|
|
|
30
|
Total
|
2,195
|
|
68
|
|
|
|
(54)
|
|
—
|
|
|
|
2,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2017
|
|
New Builds
|
|
|
|
Closures
|
|
Refranchised
|
|
|
|
6/30/2018
|
Company-owned
|
29
|
|
1
|
|
|
|
(3)
|
|
(1)
|
|
|
|
26
|
Franchise
|
271
|
|
26
|
|
|
|
(31)
|
|
1
|
|
|
|
267
|
Total
|
300
|
|
27
|
|
|
|
(34)
|
|
—
|
|
|
|
293
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(amounts in US$
million)
|
(unaudited)
|
|
Quarter Ended
6/30/18
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,352
|
|
|
$
|
528
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,888
|
|
Franchise fees and
income
|
|
|
33
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
15
|
|
|
|
—
|
|
|
|
4
|
|
|
|
122
|
|
|
|
—
|
|
|
|
141
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
1
|
|
|
|
(1)
|
|
|
|
5
|
|
Total
revenues
|
|
$
|
1,400
|
|
|
$
|
528
|
|
|
$
|
18
|
|
|
$
|
123
|
|
|
$
|
(1)
|
|
|
$
|
2,068
|
|
Company restaurant
expenses
|
|
|
1,125
|
|
|
|
470
|
|
|
|
8
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
1,602
|
|
General and
administrative expenses
|
|
|
45
|
|
|
|
28
|
|
|
|
9
|
|
|
|
19
|
|
|
|
—
|
|
|
|
101
|
|
Franchise
expenses
|
|
|
17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
15
|
|
|
|
—
|
|
|
|
3
|
|
|
|
120
|
|
|
|
—
|
|
|
|
138
|
|
Other operating
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
1
|
|
|
|
—
|
|
|
|
7
|
|
Closures and
impairment expenses, net
|
|
|
6
|
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Other (income)
expense, net
|
|
|
(7)
|
|
|
|
(1)
|
|
|
|
(1)
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(7)
|
|
|
|
|
1,201
|
|
|
|
508
|
|
|
|
25
|
|
|
|
142
|
|
|
|
(1)
|
|
|
|
1,875
|
|
Operating Profit
(Loss)
|
|
$
|
199
|
|
|
$
|
20
|
|
|
$
|
(7)
|
|
|
$
|
(19)
|
|
|
$
|
—
|
|
|
$
|
193
|
|
Quarter Ended
6/30/17
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,159
|
|
|
$
|
497
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
1,664
|
|
Franchise fees and
income
|
|
|
32
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
33
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
15
|
|
|
|
1
|
|
|
|
4
|
|
|
|
121
|
|
|
|
141
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
Total
revenues
|
|
$
|
1,206
|
|
|
$
|
498
|
|
|
$
|
16
|
|
|
$
|
121
|
|
|
$
|
1,841
|
|
Company restaurant
expenses
|
|
|
956
|
|
|
|
423
|
|
|
|
9
|
|
|
|
—
|
|
|
|
1,388
|
|
General and
administrative expenses
|
|
|
38
|
|
|
|
26
|
|
|
|
4
|
|
|
|
50
|
|
|
|
118
|
|
Franchise
expenses
|
|
|
17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
15
|
|
|
|
1
|
|
|
|
3
|
|
|
|
118
|
|
|
|
137
|
|
Other operating
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
Closures and
impairment expenses, net
|
|
|
9
|
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18
|
|
Other income,
net
|
|
|
(11)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11)
|
|
Total costs and
expenses, net
|
|
|
1,024
|
|
|
|
459
|
|
|
|
19
|
|
|
|
168
|
|
|
|
1,670
|
|
Operating Profit
(Loss)
|
|
$
|
182
|
|
|
$
|
39
|
|
|
$
|
(3)
|
|
|
$
|
(47)
|
|
|
$
|
171
|
|
Year to Date Ended
6/30/18
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
2,796
|
|
|
$
|
1,092
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,904
|
|
Franchise fees and
income
|
|
|
70
|
|
|
|
1
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
74
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
32
|
|
|
|
—
|
|
|
|
11
|
|
|
|
259
|
|
|
|
—
|
|
|
|
302
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
2
|
|
|
|
(1)
|
|
|
|
9
|
|
Total
revenues
|
|
$
|
2,898
|
|
|
$
|
1,093
|
|
|
$
|
38
|
|
|
$
|
261
|
|
|
$
|
(1)
|
|
|
$
|
4,289
|
|
Company restaurant
expenses
|
|
|
2,268
|
|
|
|
974
|
|
|
|
16
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
3,257
|
|
General and
administrative expenses
|
|
|
91
|
|
|
|
56
|
|
|
|
16
|
|
|
|
52
|
|
|
|
—
|
|
|
|
215
|
|
Franchise
expenses
|
|
|
36
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
32
|
|
|
|
—
|
|
|
|
9
|
|
|
|
257
|
|
|
|
—
|
|
|
|
298
|
|
Other operating
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
2
|
|
|
|
—
|
|
|
|
11
|
|
Closures and
impairment expenses, net
|
|
|
6
|
|
|
|
10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
Other income,
net
|
|
|
(30)
|
|
|
|
(2)
|
|
|
|
(1)
|
|
|
|
(100)
|
|
|
|
—
|
|
|
|
(133)
|
|
|
|
|
2,403
|
|
|
|
1,039
|
|
|
|
49
|
|
|
|
211
|
|
|
|
(1)
|
|
|
|
3,701
|
|
Operating Profit
(Loss)
|
|
$
|
495
|
|
|
$
|
54
|
|
|
$
|
(11)
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
588
|
|
Year to Date Ended
6/30/17
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Total
|
|
Company
sales
|
|
$
|
2,358
|
|
|
$
|
1,024
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
3,402
|
|
Franchise fees and
income
|
|
|
66
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
69
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
32
|
|
|
|
1
|
|
|
|
9
|
|
|
|
246
|
|
|
|
288
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
Total
revenues
|
|
$
|
2,456
|
|
|
$
|
1,026
|
|
|
$
|
39
|
|
|
$
|
246
|
|
|
$
|
3,767
|
|
Company restaurant
expenses
|
|
|
1,906
|
|
|
|
846
|
|
|
|
20
|
|
|
|
—
|
|
|
|
2,772
|
|
General and
administrative expenses
|
|
|
77
|
|
|
|
51
|
|
|
|
7
|
|
|
|
81
|
|
|
|
216
|
|
Franchise
expenses
|
|
|
34
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
32
|
|
|
|
1
|
|
|
|
8
|
|
|
|
243
|
|
|
|
284
|
|
Other operating
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
6
|
|
Closures and
impairment expenses, net
|
|
|
10
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18
|
|
Other income,
net
|
|
|
(30)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
(31)
|
|
|
|
|
2,029
|
|
|
|
907
|
|
|
|
41
|
|
|
|
323
|
|
|
|
3,300
|
|
Operating Profit
(Loss)
|
|
$
|
427
|
|
|
$
|
119
|
|
|
$
|
(2)
|
|
|
$
|
(77)
|
|
|
$
|
467
|
|
The above tables reconcile segment information, which is based
on management responsibility, with our Consolidated Statements of
Income.
(1)
Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes. Amount
includes revenues and expenses associated with transactions with
franchisees and unconsolidated affiliates such as inventory
procurement and other services provided to franchisees and
unconsolidated affiliates. The Corporate and Unallocated column in
the above tables includes, among other amounts, all amounts that we
have deemed Special Items. See "Reconciliation of Reported GAAP
Results to Adjusted Measures".
Notes to the Consolidated Statements of
Income, Consolidated Balance Sheets
and Consolidated
Statements of Cash Flows
(amounts in US$
million)
(unaudited)
(a) Amounts presented as of and
for the quarter and year to date ended June
30, 2018 are unaudited.
(b) As a result of the acquisition
of Wuxi KFC, the Company recognized a gain of $98 million from the re-measurement of our
previously held 47% equity interest at fair value, which was not
allocated to any segment for performance reporting purposes.
(c) The tax expense was determined
based upon the nature as well as the jurisdiction of each Special
Item at the applicable tax rate.
View original
content:http://www.prnewswire.com/news-releases/yum-china-reports-second-quarter-2018-results-300690085.html
SOURCE Yum China Holdings, Inc