Exhibit 99.1

Yum China Reports Third Quarter 2020 Results

 

Total Revenues grew 1%. System Sales grew 1% in constant currency

Opened 312 new stores and reached 10,150 stores in total

Reported $556 million Operating Profit and $320 million Adjusted Operating Profit

 

Shanghai, China (October 28, 2020) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the third quarter ended September 30, 2020.

 

Impact of COVID-19 Outbreak and Mitigation Efforts  

 

Third quarter operations improved, although still impacted by reduced traffic at transportation and tourist locations, the delayed and shortened school holiday and the other lingering effects of the COVID-19 outbreak. Dine-in volume has been recovering, while delivery and takeaway remained popular options. The Company’s primary focus continues to be safety, efficiency and driving traffic. We launched attractive digital and membership campaigns with strong value propositions to drive sales recovery.

 

Through proactive cost structure realignment and productivity improvements, the Company achieved restaurant margin and operating profit expansions compared to the prior year period. Labor productivity improved year over year, partially due to part-time worker shortages. We intend to increase staffing levels in the coming months to balance service and efficiency.

 

Third Quarter Highlights

 

Completed our secondary listing on the main board of the Hong Kong Stock Exchange and global offering on September 10, 2020, with net proceeds of $2.2 billion.

 

 

Completed the acquisition of an additional 25% equity interest in an unconsolidated affiliate that operates KFC stores in and around Suzhou, China (“Suzhou KFC”), for cash consideration of $149 million, bringing Yum China’s equity interest in Suzhou KFC to 72%. In connection with the acquisition, a non-cash gain of $239 million was recorded from the re-measurement of our previously held equity interest in Suzhou KFC at fair value.

 

Results include the consolidation of Huang Ji Huang since April 2020, and Suzhou KFC since August 2020.

 

 

Total revenues increased 1% year over year to $2.35 billion from $2.32 billion (flat excluding foreign currency translation (“F/X”)).

 

 

Total system sales increased 1% year over year, with declines of 1% at KFC and 6% at Pizza Hut, excluding F/X.

 

Same-store sales declined 6% year over year, with a 6% decline at KFC and 7% decline at Pizza Hut, excluding F/X.

 

Opened 312 new stores during the quarter; total store count reached 10,150 as of September 30, 2020.

 

Restaurant margin was 18.6%, compared with 17.7% in the prior year period.

 

Operating Profit increased 86% year over year to $556 million from $300 million (83% increase excluding F/X), primarily due to the re-measurement gain of Suzhou KFC acquisition.

 

 

Adjusted Operating Profit increased 7% year over year to $320 million from $300 million (5% increase excluding F/X).

 

 

Effective tax rate was 25.6%.

 

Net Income increased 96% to $439 million from $223 million in the prior year period, primarily due to the increase in Operating Profit and gains from our equity investment in Meituan Dianping (“Meituan”).

 

 

Adjusted Net Income increased 17% to $263 million from $223 million in the prior year period (10% increase excluding the $29 million and $12 million net gains in the third quarter of 2020 and 2019, respectively, from our equity investment in Meituan; 8% increase if further excluding F/X).

 

 

Diluted EPS increased 90% to $1.10 from $0.58 in the prior year period.

 

 

Adjusted Diluted EPS increased 14% to $0.66 from $0.58 in the prior year period (5% increase excluding the gains from our equity investment in Meituan in 2020 and 2019; 4% increase if further excluding F/X).

 

Yum China Holdings, Inc. •  Shanghai, China •  Website http://ir.yumchina.com

 


The following information was filed by Yum China Holdings, Inc. (YUMC) on Wednesday, October 28, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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