Yum China Q1 2020 Earnings Report
Key Takeaways
Yum China's first quarter 2020 results were significantly impacted by the COVID-19 outbreak, with total revenues declining 24% year-over-year to $1.75 billion and operating profit declining 68% to $97 million. However, the company managed to sustain operating profitability through effective cost management, labor productivity improvement, and one-time relief from landlords and government agencies.
Total revenues declined 24% year over year to $1.75 billion.
Total system sales declined 20% year over year.
Same-store sales declined 15% year over year.
Operating Profit declined 68% year over year to $97 million.
Yum China
Yum China
Yum China Revenue by Segment
Forward Guidance
The Company expects the COVID-19 outbreak is likely to have a material and extended adverse impact on its operational and financial results for full year 2020.
Positive Outlook
- To open between 800 and 850 new stores (gross), excluding Huang Ji Huang.
- To make capital expenditures between $500 million and $550 million
- The Company pioneered contactless delivery and contactless takeaway in late January to enhance preventative health measures.
- Our digital infrastructure enabled us to stay nimble and communicate quickly with customers and employees online and through mobile technology.
- We were able to inform our members about compelling offers through our APPs, while efficiently adjusting labor hours based on rapidly changing traffic and sales patterns.
Challenges Ahead
- Future operations, as well as the Company’s cash flows and financial position, may be materially and adversely influenced by further developments related to this global outbreak.
- Potential additional announcements and actions from governments and local authorities
- Disruption in our supply chain
- Our inability to provide safety measures to protect our employees
- Global infections continue to rise.
Revenue & Expenses
Visualization of income flow from segment revenue to net income