Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Q3 2022 Earnings Presentation
26 slides from Yum China's earnings presentation, Nov 1, 2022
Slide 1: Third Quarter 2022 Results
Third Quarter 2022 Results 2 November 2022 NYSE: YUMC and HKEX: 9987
Slide 2: Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures
Cautionary Statement on Forward-Looking Statements & Non-GAAP Measures 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 covere
Slide 3: Delivered Sales and Profit Growth in Q3 Through Strong Execution
Delivered Sales and Profit Growth in Q3 Through Strong Execution Q3 2020 2021 2022 Total stores 10,150 11,415 12,409 Focus on Gross new stores 312 524 403 Net new stores 196 392 239 Resilience Revenue Operating profit1 $2.35bn $556mn $2.55bn $178mn $2.68bn $316mn Growth Adjusted operating profit Rev
Slide 4: Capturing Significant Off-premise Demand
Capturing Significant Off-premise Demand Pizza Hut Delivery Offer Delivery Off-premise Buy 2 pizzas for ¥99 % of Company sales1 Delivery sales growth2 % of Company sales1 ~65% ~37% ~60% ~32% 55%+ ~27% +19% vs Q3’21 Q3 Q3 2020 2021 2022 ~49% ~45% ~38% ~41% ~40% ~32% +15% vs Q3’21 Q3 Q3 1 % of Company
Slide 5: Driving Digital Ordering and Member Sales
Driving Digital Ordering and Member Sales Digital Orders Members1 Member sales2 KFC Sold 100mn+ Privilege Subscriptions Since 2018 % of Company sales3 Million % of System sales ~90% 370+ ~88% 320+ ~63% ~83% ~61% ~61% 260+ Q3 2020 Q3 2021 Q3 2022 ~92% ~65% ~85% 125+ ~62% 105+ 80+ ~53% ~65% 1 Cumulati
Slide 6: Opening Profitable New Stores for Long-Term Growth
Opening Profitable New Stores for Long-Term Growth Accelerating Store Growth Penetrating into Lower-tier Cities Maintained New Unit Payback1 Gross New Stores Q1-3 22 New Stores Total Stores By Year of Opening 1,243 1,171 ~2 yrs ~2 yrs ~2 yrs 660 41 43 % 57 % 59 % % YTD 20 YTD 21 YTD 22 Jul'18-Jun'19
Slide 7: KFC: Highest Q3 Restaurant Margin Since Spin-Off
KFC: Highest Q3 Restaurant Margin Since Spin-Off Q3 2020 2021 2022 Total stores 6,925 7,908 8,675 Net new stores 176 299 165 System sales growth1 (1)% +1% +5% Same-store sales growth1 (6)% (8)% Flat Restaurant margin 19.4% 13.6% 20.6% Operating profit ($ mn)2 286 196 328 Delivery sales3 ~27% ~32% ~3
Slide 8: Innovative Products at Attractive Prices
Innovative Products at Attractive Prices Super Abundant Bucket Extra Juicy Beef Burgers CP (Couple) Burgers Chicken Breast Burgers with Chicken Feet 100mn+ Sold since May 2021 Cumin Beef & Chicken Burger Original price ¥17.5 19 pieces for ¥29.9; from 5pm Juicy Beef Burger at ¥13.9 Pickle & Pork Bell
Slide 9: Driving Traffic with Abundant Value
Driving Traffic with Abundant Value Buy More Save More Family Bucket Crazy Thursday Lunch Combo on Sunday 3 days only – Family bucket @ ¥59 Original recipe chicken, chicken 34%-50% off (4-8 items) 3-item lunch combos from ¥19 and ¥69 (with burgers) nuggets, single bone chicken, lemon Pick from 15 it
Slide 10: Pizza Hut's Transformation Reflected in Broad-based Improvement
Pizza Hut’s Transformation Reflected in Broad-based Improvement Q3 2020 2021 2022 Total stores 2,277 2,503 2,806 Net new stores 19 78 95 System sales growth1 (6)% +1% +7% Same-store sales growth1 (7)% (5)% +2% Restaurant margin 16.7% 8.2% 13.4% Operating profit ($ mn)2 61 18 49 Delivery sales3 ~32%
Slide 11: Significant Improvement in Value Proposition with Bountiful Choices
Significant Improvement in Value Proposition with Bountiful Choices Scream Wednesday Buy More Save More Combo Buy One Get One Free 30% off pizza including 20-30% discount (6-9 items) ¥24.5+ per pizza selected two-in-one pizzas Brand new Durian & Pork Crispy Pizza 2nd pizza redeemable within 30 days
Slide 12: Reinforcing Pizza Expertise and Connecting with Young Customers
Reinforcing Pizza Expertise and Connecting with Young Customers Durian Trio Pizza Three New Pizzas Genshin Impact Campaign Campaign includes themed stores, Using three types of durian Peking Duck / Cumin Lamb / Spicy & Hot Supreme combos, souvenirs and packaging 12
Slide 13: Lavazza is Making Solid Progress Along its Four-Pillar Strategy
Lavazza is Making Solid Progress Along its Four-Pillar Strategy Digital & Delivery Authentic Italian Experience Coffee Expertise Optimize Store Models Capabilities Tigelle, Italian flatbread Buffalo milk osmanthus latte New design, improved user For better customer experience with egg or beef interf
Slide 14: 78 Stores in 11 Cities
78 Stores in 11 Cities Hangzhou 501 Plaza Guangzhou ICC Mall Shanghai Xuhuibinjiang Shanghai Xuhuibinjiang 14
Slide 15: Dual-Primary-Listed on NYSE & HKEX
Dual-Primary-Listed on NYSE & HKEX • Effective October 24, 2022 • Inclusion in both Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs on the same day • Expected to provide additional access to investors, broaden shareholder base and increase liquidity • Company shares listed on the HK
Slide 16: Capital Allocation Balances Operation Needs, Long-term Growth and Return to Shareholders
Capital Allocation Balances Operation Needs, Long-term Growth and Return to Shareholders Q3 Year-to-date Disciplined Capital Allocation $ million 2020 2021 2022 • Maintain sufficient cash for operations and Cash and short-term investment 4,206 4,377 4,037 contingencies Cash flow from operating activ
Slide 17: Maintaining Net New Unit and Capex Targets for 2022
Maintaining Net New Unit and Capex Targets for 2022 • Approximately 1,000 to • Capital expenditure in the 1,200 net new stores range of $800mn to $1bn • Continue with disciplined • Make significant capex approach in opening high- investments in store network quality new stores expansion, supply chai
Slide 18: Together We Stand
Together We Stand • Provided hot food to impacted areas such as the Henan flooding (2021) and Sichuan earthquake (2022) • Delivered essential food packages to frontline workers and volunteers during regional COVID outbreaks 18
Slide 19: Appendix
YumChina Appendix
Slide 20: Yum China Key Financials
Yum China Key Financials Q3’20 Q3’21 Q3’22 Q3 YoY YTD’20 YTD’21 YTD’22 YTD YoY Same-store sales growth1 (6)% (7)% Flat / (11)% +2% (8)% / System sales growth1 +1% +1% +5% / (8)% +15% (5)% / Total revenue ($bn) 2.35 2.55 2.68 +5% 6.00 7.56 7.48 (1)% Restaurant margin 18.6% 12.2% 18.8% +6.6ppts 14.7%
Slide 21: Key Factors of Year-over-year Change
Key Factors of Year-over-year Change 7.56 7.48 781 753 Total 6.00 Operating 556 588 Revenue Profit 316 2.35 2.55 2.68 ($mn) 178 ($bn) Q3 YTD Q3 YTD Key factors for Q3 year-over-year growth Key factors for Q3 year-over-year growth + New unit contribution + New unit contribution + Consolidation of Han
Slide 22: KFC Key Financials
KFC Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 20.6% 19.4% 12% 16.2%16.8%16.6% 13.6% 5% 763 1% 670 -1% 598 -5% -7% Q3 YTD Q3 YTD Same-store sales growth 1 328 286 196 2022 vs 2021 Q3 0% 0% Same-store sales Flat - Transactions (7)% -6% -8% -9
Slide 23: Pizza Hut Key Financials
Pizza Hut Key Financials Sales Growth (%) Restaurant Margin (%) Operating Profit 2 ($ mn) System sales growth 1 16.7% 13.4% 20% 12.2% 10.6% 11.1% 7% 117 1% 8.2% -6% -3% 90 -19% Q3 YTD Q3 YTD 61 Same-store sales growth 1 49 48 2022 vs 2021 Q3 11% 18 2% Same-store sales +2% - Transactions +2% -7% -5%
Slide 24: Reconciliation of Reported Results to Non-GAAP Measures
Reconciliation of Reported Results to Non-GAAP Measures Quarter Ended Year to Date Ended 9/30/2022 9/30/2021 9/30/2022 9/30/2021 Non-GAAP Reconciliations Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 316 $ 178 $ 588 $ 753 Special Items, Operating Profit (2) 10 (5
Slide 25: About Yum China
About Yum China Yum China Holdings, Inc. is a licensee of Yum! Brands in mainland China. It has exclusive rights in mainland China to KFC, China's leading quick-service restaurant brand, Pizza Hut, the leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chai
Slide 26: Well Recognized Sustainability Efforts
Well Recognized Sustainability Efforts 1 2 3 4 Member of DJSI: MSCI Environmental, Top Employer in China Bloomberg World Index and Social and Governance by Emerging Market Index (ESG) Ratings: Top Employers Institute Gender-Equality Index 2020 and 2021 “AA” rating in 2022 2019-2022 2019-2022 26