Yum China Results

Yum China Reports 6% Same-Store Sales Growth and 10% System Sales Growth

Operating Profit Up 11% YoY; Board Declares Initial Dividend and Expands Share Repurchase Authorization

Yum! Brands

Yum China Holdings, Inc. (NYSE:  YUMC) today reported unaudited results for the third quarter ended August 31, 2017. 

Third Quarter Highlights

  • Same-store sales grew 6%, including growth of 7% at KFC, flat at Pizza Hut. 
  • Total system sales grew 10%, including growth of 11% at KFC and 7% at Pizza Hut, excluding foreign currency translation ("F/X"). 
  • Opened 129 new restaurants during the quarter. 
  • Total restaurant margin increased 0.8 percentage points to 20.0%, primarily driven by same-store sales leverage. 
  • Operating profit increased 11%, and 13% excluding F/X, primarily driven by same-store sales growth. F/X negatively impacted reported operating profit by $5 million. 
  • Basic EPS increased 4% to $0.55 and diluted EPS was flat at $0.53. 
  • Effective tax rate was 31.7%, compared to 29.8% in the prior-year quarter, primarily due to higher costs of repatriating current year earnings into the U.S. 
  • Net income increased 9% to $211 million. 
  • Adjusted EBITDA increased 9% to $425 million. 

Dividend and Share Repurchase

  • The Board of Directors has approved a regular quarterly cash dividend program, and declared an initial cash dividend of $0.10 per share on Yum China's common stock. 
  • The Board of Directors has increased Yum China's existing share repurchase authorization from $300 million to an aggregate of $550 million.

 

Key Results

Third Quarter

Year to Date

% Change

% Change

System

Sales

Same-Store

Sales

Net New

Units

Operating

Profit

System

Sales

Same-Store

Sales

Net New

Units

Operating

Profit

Yum China

+10

+6

+6

+11

+7

+4

+6

+23

KFC

+11

+7

+5

+20

+8

+4

+5

+20

Pizza Hut

+7

-

+8

-

+7

+1

+8

+37

 

Third Quarter

Year to Date

(in US$ million, except

% Change

% Change

for per share data and percentages)

2017

2016

Reported

Ex F/X

2017

2016

Reported

Ex F/X

Reported Operating Profit

$

317

$

286

+11

+13

$

714

$

582

+23

+27

Operating Profit Before Special Items1

$

314

$

283

+11

+12

$

711

$

580

+23

+27

Net income

$

211

$

192

+9

+11

$

493

$

414

+19

+23

Adjusted EBITDA1

$

425

$

390

+9

+11

$

1,004

$

895

+12

+16

Basic EPS

$

0.55

$

0.53

+4

+6

$

1.28

$

1.14

+12

+16

Diluted EPS

$

0.53

$

0.53

-

+2

$

1.24

$

1.14

+9

+13

Diluted EPS Before Special Items1

$

0.52

$

0.52

-

+2

$

1.23

$

1.11

+11

+15

1See Reconciliation of Reported Results to Non-GAAP Measures included in the accompanying tables of this release for further details.  

Note: All comparisons are versus the same period a year ago. Consistent with prior years, Yum China's fiscal third quarter includes June, July and August results. Percentages may not recompute due to rounding.  

System sales and same-store sales percentages exclude the impact of F/X. 

CEO Comments

"We are pleased to report the third consecutive quarter of delivering positive same-store sales growth. With revenues exceeding $2 billion in the quarter, restaurant margin, operating profit and net income have all improved. We opened 129 new restaurants in the third quarter and we are on track to achieve our development target of 550-600 new stores in the year," said Micky Pant, CEO of Yum China.  

"In this quarter, our strategic initiatives on digital and delivery continued to show encouraging development, which we believe will enable our long-term growth. The connection with our over 120 million loyalty members is getting stronger. The growth in mobile payments and cashless settlement methods for sales continued to outperform previous quarters. With over 5,100 restaurants across China offering delivery service, delivery contributed over 14% of company sales in the third quarter. 

Given the strength of our business and our confidence in generating strong cash flows long term, our Board of Directors has approved a regular quarterly cash dividend program and authorized additional share repurchases.  These demonstrate our strong commitment to increase shareholder returns through disciplined capital allocation while simultaneously driving strong operating performance.

With our strong operating results in this third quarter and our commitment to return capital to shareholders, we believe we are well positioned to continue to increase shareholder value over the long run."

New-Unit Development and Asset Upgrade

  • Opened 129 new restaurants during the third quarter, and 352 year to date. 
  • Remodeled 200 restaurants during the third quarter, and 429 year to date, led by KFC. 

 

New Units

Restaurant Count

Third

As of Third Quarter End

Quarter

Year to Date

2017

2016

Yum China

129

352

7,747

7,330

KFC

81

215

5,347

5,087

Pizza Hut

38

102

2,143

1,993

Little Sheep, East Dawning, Taco Bell

10

35

257

250

 

Total Restaurant Count

Restaurant Count

As of Third Quarter End

2017

2016

Restaurants

7,747

7,330

Company-owned

6,149

5,847

Unconsolidated Affiliates

872

812

Franchisees

726

671

Restaurant Margin

  • For the third quarter, restaurant margin for Yum China increased 0.8 percentage points to 20.0%, primarily driven by same-store sales leverage and labor efficiency, partially offset by wage inflation and promotion costs. 
  • Year to date, restaurant margin for Yum China increased 2.3 percentage points to 19.3%, primarily due to the impact of retail tax structure reform, and also driven by same-store sales leverage, partially offset by wage inflation and commodity inflation.

 

Third Quarter

Year to Date

2017

2016

% ppts

change

2017

2016

% ppts

change

Yum China

20.0

%

19.2

%

0.8

19.3

%

17.0

%

2.3

KFC

21.1

%

19.7

%

1.4

20.1

%

18.2

%

1.9

Pizza Hut

17.8

%

18.7

%

(0.9)

17.6

%

14.9

%

2.7

Digital and Delivery

  • Driven by our digital initiatives, we continued to strengthen our loyalty membership programs. By the end of the third quarter, total members in our loyalty programs surpassed 120 million, including 97 million members for KFC and 30 million for Pizza Hut. 
  • Mobile payments exceeded 45% of company sales in the third quarter of 2017. Over $1.2 billion in company sales were settled by cashless payment methods during the quarter. 
  • Over 5,100 restaurants across China offered delivery services as of the end of the third quarter. Delivery contributed over 14% of company sales in the third quarter.

Share Repurchase Update

  • For the year to date ended August 31, 2017, we repurchased approximately 3.4 million shares for $128 million at an average price of $38.18 per share. 
  • In October 2017, the Board of Directors increased Yum China's existing share repurchase authorization from $300 million to an aggregate of $550 million.

Dividend

  • The Board of Directors has approved a regular quarterly cash dividend program, and declared an initial cash dividend of $0.10 per share on Yum China's common stock, payable as of the close of business on December 21, 2017 to stockholders of record as of the close of business on November 30, 2017. Future dividends will be subject to review and approval by the Board of Directors.

About Yum China Holdings, Inc. 

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, which opened its first restaurant in China at the end of 2016. Yum China also owns the Little Sheep and East Dawning concepts outright. Yum China is well positioned for growth thanks to its strong competitive position, integration of its brands into Chinese popular culture and consumers' daily lives, expanding geographic footprint in China and existing operational expertise. It has a strong capital position, no external debt and expects to continue growing its system sales and profit by adding new restaurants and through growing same-store sales. Yum China had more than 7,700 restaurants and more than 420,000 employees in over 1,100 cities at the end of August 2017. A new generation of younger consumers who are digitally sophisticated and brand driven are fueling growth in consumption in China. The ongoing growth of the middle class and urban population in China is expected to create the world's largest market for restaurant brands, with Yum China poised to be the market leader.

Yum China Holdings, Inc.

Condensed Consolidated and Combined Summary of Results

(amounts in US$ million, except for number of shares and per share amounts)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

8/31/2017

8/31/2016

B/(W)

8/31/2017

8/31/2016

B/(W)

Revenues

Company sales

$

1,998

$

1,848

8

$

4,818

$

4,684

3

Franchise fees and income

40

35

14

98

90

9

Total revenues

2,038

1,883

8

4,916

4,774

3

Costs and Expenses, Net

Company restaurants

Food and paper

575

514

(12)

1,373

1,361

(1)

Payroll and employee benefits

403

376

(7)

1,018

963

(6)

Occupancy and other operating expenses

622

602

(3)

1,501

1,562

4

Company restaurant expenses

1,600

1,492

(7)

3,892

3,886

General and administrative expenses

120

101

(18)

294

271

(8)

Franchise expenses

20

20

(2)

48

51

6

Closures and impairment expenses, net

3

5

43

20

36

46

Refranchising gain, net

(4)

(87)

(2)

(8)

(74)

Other income, net

(22)

(17)

25

(50)

(44)

14

Total costs and expenses, net

1,721

1,597

(8)

4,202

4,192

Operating Profit

317

286

11

714

582

23

Interest income, net

6

3

NM

13

7

77

Income Before Income Taxes

323

289

12

727

589

23

Income tax provision

(102)

(87)

(19)

(213)

(165)

(29)

Net income – including noncontrolling interests

221

202

9

514

424

21

Net income – noncontrolling interests

10

10

6

21

10

NM

Net Income – Yum China Holdings, Inc.

$

211

$

192

9

$

493

$

414

19

Effective tax rate

31.7

%

29.8

%

(1.9) ppts.

29.3

%

28.0

%

(1.3) ppts.

Basic Earnings Per Common Share

$

0.55

$

0.53

4

$

1.28

$

1.14

12

Weighted average shares outstanding

385,836,842

363,758,219

NM

387,028,586

363,758,219

NM

Diluted Earnings Per Common Share

$

0.53

$

0.53

$

1.24

$

1.14

9

Weighted average shares outstanding

398,497,353

363,758,219

NM

397,385,512

363,758,219

NM

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

28.8

27.8

(1.0) ppts.

28.5

29.1

0.6 ppts.

Payroll and employee benefits

20.1

20.4

0.3 ppts.

21.1

20.6

(0.5) ppts.

Occupancy and other operating expenses

31.1

32.6

1.5 ppts.

31.1

33.3

2.2 ppts.

Restaurant margin

20.0

%

19.2

%

0.8 ppts.

19.3

%

17.0

%

2.3 ppts.

Operating margin

15.9

%

15.5

%

0.4 ppts.

14.8

%

12.4

%

2.4 ppts.

Percentages may not recompute due to rounding.

 

Yum China Holdings, Inc.

KFC Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

8/31/2017

8/31/2016

B/(W)

8/31/2017

8/31/2016

B/(W)

Revenues

Company sales

$

1,385

$

1,263

10

$

3,342

$

3,238

3

Franchise fees and income

38

34

13

93

87

7

Total revenues

1,423

1,297

10

3,435

3,325

3

Costs and Expenses, Net

Company restaurants

Food and paper

408

365

(11)

989

970

(2)

Payroll and employee benefits

263

243

(8)

666

625

(7)

Occupancy and other operating expenses

422

405

(4)

1,016

1,054

4

Company restaurant expenses

1,093

1,013

(8)

2,671

2,649

(1)

General and administrative expenses

42

39

(7)

106

101

(6)

Franchise expenses

19

19

(1)

46

50

7

Closures and impairment expenses, net

1

4

40

10

25

58

Other income, net

(18)

(16)

14

(45)

(38)

18

Total costs and expenses, net

1,137

1,059

(7)

2,788

2,787

Operating Profit

$

286

$

238

20

$

647

$

538

20

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

29.5

29.0

(0.5) ppts.

29.6

30.0

0.4 ppts.

Payroll and employee benefits

19.0

19.2

0.2 ppts.

19.9

19.3

(0.6) ppts.

Occupancy and other operating expenses

30.4

32.1

1.7 ppts.

30.4

32.5

2.1 ppts.

Restaurant margin

21.1

%

19.7

%

1.4 ppts.

20.1

%

18.2

%

1.9 ppts.

Operating margin

20.7

%

18.8

%

1.8 ppts.

19.3

%

16.6

%

2.7 ppts.

Percentages may not recompute due to rounding. 

 

Yum China Holdings, Inc.

Pizza Hut Operating Results

(amounts in US$ million)

(unaudited)

Quarter ended

% Change

Year to date ended

% Change

8/31/2017

8/31/2016

B/(W)

8/31/2017

8/31/2016

B/(W)

Revenues

Company sales

$

603

$

573

5

$

1,449

$

1,405

3

Franchise fees and income

1

1

37

2

2

31

Total revenues

604

574

5

1,451

1,407

3

Costs and Expenses, Net

Company restaurants

Food and paper

164

144

(15)

376

376

Payroll and employee benefits

134

129

(3)

341

326

(4)

Occupancy and other operating expenses

197

192

(2)

476

493

3

Company restaurant expenses

495

465

(6)

1,193

1,195

General and administrative expenses

27

25

(4)

70

68

(1)

Franchise expenses

1

1

(6)

2

1

(10)

Closures and impairment expenses, net

1

1

54

9

11

23

Total costs and expenses, net

524

492

(6)

1,274

1,275

Operating Profit

$

80

$

82

$

177

$

132

37

Company sales

100.0

%

100.0

%

100.0

%

100.0

%

Food and paper

27.3

25.1

(2.2) ppts.

26.0

26.8

0.8 ppts.

Payroll and employee benefits

22.2

22.6

0.4 ppts.

23.5

23.2

(0.3) ppts.

Occupancy and other operating expenses

32.7

33.6

0.9 ppts.

32.9

35.1

2.2 ppts.

Restaurant margin

17.8

%

18.7

%

(0.9) ppts.

17.6

%

14.9

%

2.7 ppts.

Operating margin

13.3

%

13.9

%

(0.7) ppts.

12.3

%

9.3

%

3.0 ppts.

Percentages may not recompute due to rounding.

 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(amounts in US$ million, except for number of shares)

8/31/2017

12/31/2016

ASSETS

(Unaudited)

Current Assets

Cash and cash equivalents

$

1,477

$

885

Short-term investments

91

79

Accounts receivable, net

81

74

Inventories, net

246

268

Prepaid expenses and other current assets

159

120

Total Current Assets

2,054

1,426

Property, plant and equipment, net

1,652

1,647

Goodwill

107

79

Intangible assets, net

104

88

Investments in unconsolidated affiliates

74

71

Other assets

301

254

Deferred income taxes

168

162

Total Assets

4,460

3,727

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable and other current liabilities

1,120

971

Income taxes payable

92

33

Total Current Liabilities

1,212

1,004

Capital lease obligations

28

28

Other liabilities and deferred credits

274

252

Total Liabilities

1,514

1,284

Redeemable Noncontrolling Interest

5

Equity

Common stock,  $0.01 par value; 1,000,000,000 shares authorized;

  388,196,025.42 shares and 383,344,835.42 shares issued at August 31, 2017

  and December 31, 2016, respectively; 384,055,643 shares and 383,344,835.42 shares

  outstanding at August 31, 2017 and December 31, 2016, respectively

4

4

Treasury stock

(148)

(20)

Additional paid-in capital

2,373

2,352

Retained earnings

533

40

Accumulated other comprehensive income

109

1

Total Equity – Yum China Holdings, Inc.

2,871

2,377

Noncontrolling interests

70

66

Total Equity

2,941

2,443

Total Liabilities, Redeemable Noncontrolling Interest and Equity

$

4,460

$

3,727

 

Yum China Holdings, Inc.

Condensed Consolidated and Combined Statements of Cash Flows

(amounts in US$ million)

(unaudited)

Year to date ended

8/31/2017

8/31/2016

Cash Flows - Operating Activities

Net income - including noncontrolling interests

$

514

$

424

Depreciation and amortization

265

272

Closures and impairment expenses

20

36

Refranchising gain

(2)

(8)

Deferred income taxes

(3)

(26)

Equity income from investments in unconsolidated affiliates

(51)

(44)

Distributions of income received from unconsolidated affiliates

36

18

Share-based compensation expense

16

9

Changes in accounts receivable

(2)

(37)

Changes in inventories

35

(35)

Changes in prepaid expenses and other current assets

(7)

34

Changes in accounts payable and other current liabilities

132

149

Changes in income taxes payable

57

54

Other, net

(23)

(22)

Net Cash Provided by Operating Activities

987

824

Cash Flows - Investing Activities

Capital spending

(262)

(268)

Purchase of short-term investments

(318)

(53)

Maturities of short-term investments

312

53

Proceeds from refranchising of restaurants

3

19

Proceeds from disposal of aircraft

19

Acquisition of business, net of cash acquired

(25)

Other, net

(4)

(2)

Net Cash Used in Investing Activities

(294)

(232)

Cash Flows - Financing Activities

Net transfers to Parent

(243)

Payment of capital lease obligations

(2)

(3)

Repurchase of shares of common stock

(128)

Employee stock option proceeds

5

Other, net

(17)

(3)

Net Cash Used in Financing Activities

(142)

(249)

Effect of Exchange Rates on Cash and Cash Equivalents

41

(18)

Net Increase in Cash and Cash Equivalents

592

325

Cash and Cash Equivalents – Beginning of Period

885

425

Cash and Cash Equivalents – End of Period

$

1,477

$

750

 

Reconciliation of Reported Results to Non-GAAP Measures  

(amounts in US$ million)  

(unaudited)

In this press release:

  • The Company provides certain percentage changes excluding the impact of F/X. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations. 
  • System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned, franchise and unconsolidated affiliate restaurants that operate our concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the Company at a rate of approximately 6% of system sales. Franchise and unconsolidated affiliate restaurant sales are not included in Company sales on the Condensed Consolidated and Combined Summary of Results; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth. 
  • Same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the Company system one year or more. 
  • Company Restaurant profit ("Restaurant profit") is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. 

In addition to the results provided in accordance with US Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides non-GAAP measures which present Operating Profit before Special Items, Diluted Earnings Per Common Share before Special Items, Effective tax rate before Special Items and Adjusted EBITDA, which we define as net income including noncontrolling interests adjusted for income tax, interest income, depreciation, amortization and other items, including store impairment charges. Special Items consist of reversal of loss associated with sale of the aircraft, income from the reversal of contingent consideration previously recorded for a business combination and impact of the redemption of the Little Sheep noncontrolling interest which are described in (a), (b), (c) and (d) in the accompanying notes. The Company excludes impact from Special Items for the purpose of evaluating performance internally. Special Items are not included in any of our segment results. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that we do not believe are indicative of our ongoing operations due to their nature. These non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial results, but should be read in conjunction with the unaudited Condensed Consolidated and Combined Summary of Results and other information presented herein. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures follows.

 

Reconciliation of Reported Results to Non-GAAP Measures (continued)

(amounts in US$ million)

(unaudited)

Quarter ended

Year to date ended

Detail of Special Items

8/31/2017

8/31/2016

8/31/2017

8/31/2016

Reversal of loss associated with sale of aircraft(a)

$

$

3

$

$

2

Income from the reversal of contingent consideration(b)

3

3

Special Items Income - Operating Profit

3

3

3

2

Tax Expense on Special Items(c)

(1)

(1)

Special Items Income, net of tax

    - including noncontrolling interests

3

2

3

1

Special Items Income, net of tax of nil

    - noncontrolling interests(d)

(8)

Special Items Income, net of tax of nil

    - Yum China Holdings, Inc.

$

3

$

2

$

3

$

9

Weighted average diluted shares outstanding

398,497,353

363,758,219

397,385,512

363,758,219

Special Items Diluted Earnings Per Common Share

$

0.01

$

0.01

$

0.01

$

0.03

Reconciliation of Reported Operating Profit to

   Operating Profit Before Special Items

Reported Operating Profit

$

317

$

286

$

714

$

582

Special Items Income - Operating Profit

3

3

3

2

Operating Profit before Special Items

$

314

$

283

$

711

$

580

Reconciliation of Reported EPS to EPS Before

   Special Items

Reported Diluted Earnings Per Common Share

$

0.53

$

0.53

$

1.24

$

1.14

Special Items Diluted Earnings Per Common Share

0.01

0.01

0.01

0.03

Diluted Earnings Per Common Share before Special Items

$

0.52

$

0.52

$

1.23

$

1.11

Reconciliation of Reported Effective Tax Rate to

   Effective Tax Rate Before Special Items

Reported effective tax rate

31.7

%

29.8

%

29.3

%

28.0

%

Impact on tax rate as a result of Special Items(c)

(0.3)

%

(0.1)

%

(0.1)

%

(—)

%

Effective tax rate before Special Items

32.0

%

29.9

%

29.4

%

28.0

%

(a) During the quarter ended August 31, 2016, we completed the sale of a corporate aircraft and recorded the reversal of a portion of the loss previously recognized within Special Items in 2015 to reflect the final proceeds of the sale. 

(b) During the quarter ended August 31, 2017, we recognized income from the reversal of contingent consideration previously recorded for a business combination as the likelihood of making payment becomes remote.

(c) The tax expense was determined based upon the nature, as well as the jurisdiction, of each Special Item at the applicable tax rate. 

(d) During the quarter ended May 31, 2016, the Little Sheep founding shareholders sold their remaining 7% Little Sheep ownership interest to the Company pursuant to their redemption rights. The difference between the purchase price of less than $1 million, which was determined using a non-fair value based formula pursuant to the agreement governing the redemption rights, and the carrying value of their redeemable noncontrolling interests was recorded as an $8 million loss attributable to noncontrolling interests.

 

Reconciliation of Net Income to Adjusted EBITDA

(amounts in US$ million)

(unaudited)

Net income, along with the reconciliation to Adjusted EBITDA, is presented below.

Quarter ended

Year to date ended

8/31/2017

8/31/2016

8/31/2017

8/31/2016

Reconciliation of Net Income to Adjusted EBITDA

Net income – noncontrolling interests

$

10

$

10

$

21

$

10

Net Income – Yum China Holdings, Inc.

211

192

493

414

Income tax provision

102

87

213

165

Interest income, net

(6)

(3)

(13)

(7)

Operating Profit

317

286

714

582

Depreciation and amortization

105

101

265

272

Store impairment charges

6

6

28

43

Special Items Income – Operating Profit

(3)

(3)

(3)

(2)

Adjusted EBITDA

$

425

$

390

$

1,004

$

895

 

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Quarter Ended 8/31/2017

KFC

Pizza Hut

Others

Corporate

and

Unallocated

Total

Total revenues

$

1,423

$

604

$

11

$

$

2,038

Company restaurant expenses

1,093

495

12

1,600

General and administrative expenses

42

27

6

45

120

Franchise expenses

19

1

20

Closures and impairment expenses, net

1

1

1

3

Other income, net

(18)

(4)

(22)

1,137

524

19

41

1,721

Operating Profit (Loss)

$

286

$

80

$

(8)

$

(41)

$

317

 

Quarter Ended  8/31/2016

KFC

Pizza Hut

Others

Corporate

and

Unallocated

Total

Total revenues

$

1,297

$

574

$

12

$

$

1,883

Company restaurant expenses

1,013

465

15

(1)

1,492

General and administrative expenses

39

25

2

35

101

Franchise expenses

19

1

20

Closures and impairment expenses, net

4

1

5

Refranchising gain, net

(4)

(4)

Other income, net

(16)

(1)

(17)

1,059

492

17

29

1,597

Operating Profit (Loss)

$

238

$

82

$

(5)

$

(29)

$

286

The above tables reconcile segment information with our Condensed Consolidated and Combined Summary of Results.  Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items.  See Reconciliation of Reported Results to Non-GAAP Measures.

 

Yum China Holdings, Inc.

Segment Results

(amounts in US$ million)

(unaudited)

Year to date ended 8/31/2017

KFC

Pizza Hut

Others

Corporate

and

Unallocated

Total

Total revenues

$

3,435

$

1,451

$

30

$

$

4,916

Company restaurant expenses

2,671

1,193

28

3,892

General and administrative expenses

106

70

10

108

294

Franchise expenses

46

2

48

Closures and impairment expenses, net

10

9

1

20

Refranchising gain, net

(2)

(2)

Other income, net

(45)

(1)

(4)

(50)

2,788

1,274

38

102

4,202

Operating Profit (Loss)

$

647

$

177

$

(8)

$

(102)

$

714

 

Year to date ended 8/31/2016

KFC

Pizza Hut

Others

Corporate

and

Unallocated

Total

Total revenues

$

3,325

$

1,407

$

42

$

$

4,774

Company restaurant expenses

2,649

1,195

43

(1)

3,886

General and administrative expenses

101

68

6

96

271

Franchise expenses

50

1

51

Closures and impairment expenses, net

25

11

36

Refranchising gain, net

(8)

(8)

Other income, net

(38)

(1)

(5)

(44)

2,787

1,275

48

82

4,192

Operating Profit (Loss)

$

538

$

132

$

(6)

$

(82)

$

582

The above tables reconcile segment information with our Condensed Consolidated and Combined Summary of Results.  Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items.  See Reconciliation of Reported Results to Non-GAAP Measures.



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