Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Investor Day (2021)
21 slides from Yum China's investor day presentation, 2021
Slide 1: Andy Yeung, Chief Financial Officer
Andy Yeung Chief Financial Officer
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements. This presentation 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
Slide 3: Solid Track Record and Proven Resiliency
Solid Track Record and Proven Resiliency From 2016 to 2019 From 2019 1H to 2021 1H Total growth CAGR Total growth 2-year growth % R Store count1 +1,638 +7% +1,624 +19% G Revenue2 +$1.7 bn +7% +$0.6 bn +13% M Operating Profit2 +$267 mn +12% +$68 mn +13% 1. Total growth of store count from Jan. 1, 201
Slide 4: Resiliency Helps Mitigate Short Term Challenges
Resiliency Helps Mitigate Short Term Challenges Regional Outbreaks Services Activity No. of Medium and High Risk Districts/Counties China Non-manufacturing PMI1 R July-Aug.: 56.3 Nanjing, 69 55.2 Dec.’20-Feb.’21: 54.9 Yangzhou, Heilongjiang, Zhangjiajie, 53.5 G Shijiazhuang, Jilin Zhengzhou, etc. 52
Slide 5: Innovation Drives Sales Growth
Innovation Drives Sales Growth Digital Off-Premise New Retail R ~20% ~55% ~85% >50% ~RMB200 mn 2017 2019 2021 1H Off-premise % of sales Sales Digital ordering 2021 1H 2021 1H1 G ~29% ~52% ~61% +64% 70+ M 2017 2019 Member sales % 2021 1H Delivery sales growth 2021 1H vs 2019 1H SKUs as of Aug. 31, 20
Slide 6: Develop New Runway for Growth
Develop New Runway for Growth R ~2-3% 180,000 +50% +45% >10x Beef burger sales mix Juicy whole chicken sold Tea drinks cups sold Steak pieces sold One person meal set May-Aug. 2021 within a week in Aug. 2021 2021 1H vs 2019 1H 2021 1H vs 2019 1H 2021 1H vs 2019 1H G M
Slide 7: Focus on Driving Long Term Growth
Focus on Driving Long Term Growth 1 2 3 R Accelerate growth of Develop Coffee as the Invest ahead to KFC and Pizza Hut third growth engine widen strategic moat G M
Slide 8: Stepping up Capex to Support "RGM"
Stepping up Capex to Support “RGM” Annual Capital Expenditure 5-year Capital Expenditure $ mn $ bn ~5 – 6.5 New unit development R Store remodeling ~700-800 G Emerging brands 2.2 419 M Supply chain and infrastructure Digital and technology 2020 2021E Past 5 years Next 5 years
Slide 9: Aggressive Store Expansion Plan
In 5 years: Aggressive Store Expansion Plan $2-2.5bn 20,000 stores R x2 G 10,506 stores M 2020 2025 Next Milestone
Slide 10: Increasing Store Density and City Penetration
Increasing Store Density and City Penetration Expand city coverage Increase store density Average no. of stores in each R No. of cities with KFC T1-2 cities 138 ~1,200 G 1,500+ 103 1,100+ M 2016 2021 1H Tracking 2016 2021 1H
Slide 11: Disciplined Approach to Store Network Expansion
Disciplined Approach to Store Network Expansion New Store Economics Stores opened Stores opened (Per store) during Oct. 2016- New stores during Oct. 2016- New stores Sep. 20171 opened in 20192 Sep. 20171 opened in 20192 R Average pre-tax Cash Payback Period ~2 years ~2 years <4 years ~3-4 years G Ca
Slide 12: Keeping Stores Fresh
In 5 years: Keeping Stores Fresh ~$1bn Number of store remodeling Flexible Remodels increases as the portfolio grows Maintain target 939 R Full Remodel 791 G Partial Remodel ~10% ~3 years of store portfolio per year M Average period since last Store Refresh remodel or opening 2016 2020
Slide 13: Investing in Emerging Brands
Investing in Emerging Brands R • Joint venture with Lavazza • Initial funding of $200 mn G • YUMC owns 65% of JV M • 1,000 Lavazza stores by 2025 • Distribute retail coffee products in China
Slide 14: Enhancing Supply Chain & Infrastructure
In 5 years: Enhancing Supply Chain & Infrastructure $1-1.5bn Net Zero Farm-to-fork greenhouse gas digitalization R emissions Expand Enhance G logistics operations network M More Other capital automation projects Support 20,000 store More agile and efficient Create a more sustainable network op
Slide 15: Strengthening Technology & Digital Moat
In 5 years: Strengthening Technology & Digital Moat $1-1.5bn Automation, AI & Drive sales and labor productivity R Virtual stores Innovation Better customer experience G R&D centers, JV & 3 party collaboration rd Omni-channel growth M Implementation Cyber security and IoT, Cloud computing da
Slide 16: Strong Cash Flows Support Business Growth
Strong Cash Flows Support Business Growth $ 4.5 bn 85% ~ + 62% Operating Average Operating Free Cash Flows Cash Flows Cash Flows Conversion1 2020 vs 2016 2017-2020 2017-2020 1. Operating cash flows divided by Adjusted EBITDA in reported currency
Slide 17: Committed to Return to Shareholders
Committed to Return to Shareholders ~$1.3 bn Quarterly dividends Cash return to Shareholders since Share repurchases spin-off1 1. From Jan. 1, 2017 to June 30, 2021
Slide 18: Long Term Potential
Long Term Potential System Sales Operating Profit EPS Growth Growth Growth HIGH SINGLE TO DOUBLE DIGITS1 1. In constant currency
Slide 19: Appendix
Appendix 19
Slide 20: Operating Cash Flows Conversions
Operating Cash Flows Conversions $ mn 2017 2018 2019 2020 Net Income – Yum 398 708 713 784 China Holdings, Inc. Net Income- 26 28 30 29 noncontrolling interests Income tax provision 379 214 260 295 Interest income, net (25) (36) (39) (43) Investment (gain) loss - 27 (63) (104) Operating profit 778 9
Slide 21: YumChina
YumChina