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Dec 31, 2019
Yum China Q4 2019 Earnings Report
Yum China's Q4 2019 earnings increased, driven by system sales growth and expansion, but the coronavirus outbreak is expected to materially affect 2020 sales and profits.
Key Takeaways
Yum China's fourth-quarter total revenues increased by 6% year over year to $2.03 billion. Total system sales grew by 8% year over year, with KFC growing 10% and Pizza Hut growing 1%, excluding F/X. Same-store sales grew by 2% year over year, with a 3% increase at KFC and flat same-store sales at Pizza Hut, excluding F/X. Net income increased 22% to $90 million. Diluted EPS increased 21% to $0.23.
Total revenues increased 6% year over year to $2.03 billion (8% increase excluding foreign currency translation (“F/X”)).
Total system sales grew 8% year over year, with growth of 10% at KFC and 1% at Pizza Hut, excluding F/X.
Same-store sales grew 2% year over year, with a 3% increase at KFC and flat same-store sales at Pizza Hut, excluding F/X.
Net Income increased 22% to $90 million from $74 million in the prior year period.
Revenue by Segment
Forward Guidance
The Company provides the following fiscal year 2020 targets, subject to revision based on the impact from the coronavirus:
Positive Outlook
- Between 800 and 850 gross new stores.
- Capital expenditures between $500 million and $550 million.
Challenges Ahead
- The outbreak is likely to have a materially adverse impact on the Company’s operating and financial results for the first quarter of 2020 and full year 2020.
- The Company has taken a number of measures to protect its employees, customers and business partners, including the temporary closure of more than 30% of its restaurants in China.
- For restaurants that remain open, same-store sales since the Chinese New Year holiday period were down 40-50% compared to the comparable Chinese New Year holiday period in 2019, due to shortened operating hours, reduced traffic and other factors related to the outbreak.
- As a result of the outbreak, the Company may experience operating losses for the first quarter of 2020, and if the sales trend continues, for the full year 2020.
- Future operations, as well as the Company’s cash flows and financial position, may be materially and adversely influenced by further developments related to the outbreak, including potential additional announcements and actions from the central government and local authorities, disruption in our supply chain, inability to provide safety measures to protect our employees, or other reasons.
Revenue & Expenses
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Historical Earnings Impact
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Avg. Return Before/After Earnings
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