Yum China (YUMC) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue reached a record $10.98bn; adjusted operating profit was a record $1.121bn, up 77% YoY, and net new stores reached a record 1,697.

• FY system sales grew 21%, with 9% contribution from net new units and 7% same-store sales growth; total stores reached 14,644.

Financial highlights

• Q4 revenue was $2.49bn vs $2.09bn YoY; operating profit was $110mn vs $41mn, adjusted operating profit $116mn vs $40mn, and net income $97mn vs $53mn.

• Q4 diluted EPS was $0.23 vs $0.13; FY diluted EPS was $1.97 vs $1.04. FY net income was $827mn vs $442mn.

• FY operating profit grew 76% to $1.106bn; adjusted operating profit grew 77% to $1.121bn, while core operating profit grew 79% to $1.121bn.

• FY company sales rose to $10.391bn from $9.110bn; restaurant margin increased 220 bps YoY to 16.3%.

Outlook and guidance

• 2024 target: ~1,700 net new stores, with double-digit unit growth; planned CapEx is $850mn, including stepped-up investment in digital, supply chain and infrastructure.

• 2026 target remains 20,000 stores; 2024–2026 CAGRs on the 2023 base are high-single to double-digit system sales and operating profit growth, and double-digit EPS growth, in constant currency.

• Targeted shareholder returns exceed $3bn for 2024–2026, subject to market conditions, capital needs and required approvals.

• Planned 2024 share repurchases are $750mn+ under Rule 10b5-1 and $500mn under Rule 10b-18 in Q1; the quarterly cash dividend rose 23% to $0.16.