CHINA, HK & TAIWAN

Yum China Reports Fourth Quarter Results and Increases Dividend by 50%

Yum Brands will use its loyalty programs and AI-powered personalization to pursue higher digital sales and maintain its growth.

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GLO

• Fourth Quarter Operating Profit Grew 36% and OP Margin¹ Expanded 140 Basis Points
• Sequential Improvement in Same-Store Sales Index and Eighth Consecutive Quarter of Same-Store Transaction Growth
• Full Year Operating Profit Rose 5% to $1.2 Billion, Core Operating Profit² Up 12% and Diluted EPS Up 18%
• Record 2024 Results: Total Revenues of $11 Billion, 1,751 Net New Stores and $1.5 Billion Capital Returned to Shareholders

Fourth Quarter Highlights

• Total system sales grew 4% year over year (“YoY”), excluding foreign currency translation (“F/X”). The growth was primarily attributable to 5% of net new unit contribution.³
• Same-store sales reached 99% of the prior year’s level and improved sequentially from 97% in the third quarter. Same-store transactions grew 4% YoY, the eighth consecutive quarter of growth.
• Total revenues increased 4% YoY to $2.6 billion, a record-high for the fourth quarter (a 4% increase excluding F/X).
• The Company opened 534 net new stores and reached 16,395 stores as of December 31, 2024.
• Operating profit grew 36% YoY to $151 million. Core operating profit grew 35% YoY.
• OP margin was 5.8%, an increase of 140 basis points YoY, supported by restaurant margin expansion.
• Restaurant margin was 12.3%, an increase of 160 basis points YoY. Excluding $6 million in items affecting comparability, restaurant margin increased 180 basis points YoY, driven primarily by improved operational efficiencies.
• Diluted EPS increased 30% YoY to $0.30, or up 27% YoY excluding F/X. Excluding the impact of $0.01 from F/X and the mark-to-market equity investments in the fourth quarters of 2024 and 2023, Diluted EPS increased 20% YoY.

Full Year Highlights

• Total system sales grew 5% year over year, excluding F/X. The growth was primarily attributable to 7% of net new unit contribution. Same-store sales reached 97% of the prior year’s level for the year.
• Total revenues increased 3% YoY to $11.3 billion, a record level since the spin-off. Excluding F/X, total revenues would have been $200 million higher, or a 5% increase YoY.
• Store count increased 12%, or 1,751 net new stores, with 512 net new stores, or 29% opened by franchisees.
• Delivery sales grew 14% YoY, maintaining the double-digit annual growth Yum China has sustained over the past decade. Delivery contributed approximately 39% of KFC and Pizza Hut’s Company sales.
• Operating profit grew 5% YoY to $1.2 billion. Core operating profit grew 12% YoY.
• OP margin was 10.3%, up 20 basis points YoY, supported by resilient restaurant margins and savings in G&A expenses.
• Restaurant margin was 15.7%. Excluding $60 million in items affecting comparability, restaurant margin was flat YoY.
• Diluted EPS increased 18% YoY to $2.33, a record-high for the year, or up 22% YoY excluding F/X. Excluding the impact of $0.11 from F/X and the mark-to-market equity investments, Diluted EPS increased 12% YoY.
• Returned $1.5 billion to shareholders in 2024 through $248 million in cash dividends and $1.24 billion in share repurchases, representing approximately 8% of outstanding shares as of December 31, 2023.
• Digital sales⁴ reached $9.6 billion, with digital ordering accounting for approximately 90% of total Company sales.
• Total membership of KFC and Pizza Hut exceeded 525 million, up 11% versus the prior year. Member sales accounted for approximately 65% of KFC and Pizza Hut’s system sales in aggregate.

Joey Wat, CEO of Yum China, commented, “We closed the year with a strong fourth quarter, propelling us to a number of record highs in 2024. In the fourth quarter, our system sales growth surpassed the restaurant industry’s growth rate. Our same-store sales index improved sequentially to 99% of prior year levels, driven by the eighth consecutive quarter of same-store transaction growth. OP margin expanded by 140 basis points, and restaurant margin increased by 160 basis points, both on a year-over-year basis. We have steadily improved our metrics since the second quarter, with improvement in same-store sales index, margins, and operating profit growth each quarter. These results demonstrate the resilience of our business and the effectiveness of our strategy in improving sales and profitability amid challenging market conditions.”

Wat continued, “Our dual focus on operational efficiency and innovation yielded excellent results, laying a solid foundation for future growth. Our Project Fresh Eye and Project Red Eye initiatives have given us new perspectives on our operations and transformed our organization. They have made us more efficient, agile and competitive across our restaurants, shared service centers and supply chains. Our innovative measures—from menu evolution to the introduction of breakthrough business models like KCOFFEE Cafes and Pizza Hut WOW—have expanded our addressable market and increased our market share. KFC has demonstrated considerable resilience and growth momentum. Pizza Hut has made significant progress in transforming itself to become more affordable for customers and more profitable for the Company.”

Wat concluded, “Looking ahead, we remain excited about the significant growth opportunities in China. With tailored store models, we are expanding through both Company-owned stores and franchise stores and are on track to achieve our goal of 20,000 stores by 2026. Franchisees enable us to expand into remote areas, lower-tier cities and strategic locations previously beyond our reach. We are also increasing our cash dividend by a considerable 50% and continuing our share repurchases, positioning us to return a total of $4.5 billion to shareholders between 2024 and 2026. The average annual amount is equivalent to 9% of our current market capitalization. Leveraging our unique strengths, we are confident the steps we are taking will help create sustainable long-term value for our shareholders.”

Source: Yum China